Xplain why this index may not be a fool-proof test of theory

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The Big Mac Index computed by The Economist magazine has consistently found the U.S. dollar to be undervalued against some currencies and overvalued against others. This finding seems to be at odds with the purchasing power parity theory. Explain why this index may not be a fool-proof test of the theory.

Reference no: EM13982436

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Xplain why this index may not be a fool-proof test of theory : The Big Mac Index computed by The Economist magazine has consistently found the U.S. dollar to be undervalued against some currencies and overvalued against others. This finding seems to be at odds with the purchasing power parity theory. Explain why..

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