The Big Mac Index

Please read the requirement by attached documents ECON7520 International Macroeconomic and Finance, Semester 2 2017 Deadline: Monday, 24 October (Total = 100pts) 1. Please type. 2. Please submit a hard copy of your homework to the School of Economics Reception located on Level 6 of the Colin Clark Building (39) by 4pm on the due date. (Submission of a digital copy by e-mail is not allowed except the case you provide a reasonable reason before the deadline date.) 1 Essay Write an essay on the following topic. The grade of your essay is based on thoughtfullness and clarity of logics in your explanation. • Topic: The Big Mac Index Write an essay in 1000 words, excluding reference, explaining the Big Mac Index and its advantages and limitations in measuring PPP. Describe the possible cause(s) of the failure of PPP that you learned in the lecture. Also, examine the conclusion from The Economist (article link below) that “[t]he Chinese yuan, for example, is 44% undervalued against the dollar”. The following articles can help you with the essay: – http://www.economist.com/news/finance-and-economics/21714392-emerging-market-currencies- and-euro-look-undervalued-against-dollar-our-big – Ong, L.L., 1997. Burgernomics: the economics of the Big Mac standard. Journal of International Money and Finance, 16(6), pp.865-878. You are encouraged to search for more references or materials. The reference should be in Harvard style and follow Sections 5.3 and 5.5 of the Guideline: • http://www.uq.edu.au/economics/documents/studentguides/guidforassignpres.pdf Finally, please put a word count of your essay, excluding reference.