1. 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 call for a rejection of the purchasing power parity theory. Explain why this index may not be a valid test of the theory.

2. Why would China wants its own currency to be undervalued relative to the US dollar. How does China maintain an undervalued Currency . Your responses should be at least 150 words in length for each case study. You are required to use at least your textbook as source material for your responses. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.