Individual Assignment (10%)
The Big Mac index is published by The Economist as an informal way of measuring the purchasing power
parity (PPP) between two currencies and provides a test of the extent to which market exchange rates
result in goods costing the same in different countries.
1) Explain how the Big Mac Index works?
2) Does Malaysian currency overvalue or undervalue based on the big Mac index? Explain
3) Explain why would a country prefer undervalued their currency instead of overvalued it?
Font: Times new roman
Size: 12
Line spacing: 1.5
Maximum: 5 pages
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