The Economist regularly publishes the Big Mac index to examinethe validity of purchasing power parity. If purchasing power parityholds, a consumer should be able to take the same amount of moneyrequired to buy a Big Mac in the U.S. and buy a Big Mac in anyother country. What are the reasons purchasing power parity may nothold? If the U.S. dollar depreciates against the euro andpurchasing power parity holds, would a Big Mac in Europe becomemore or less expensive? Why? If purchasing power parity doesn’thold, does an American tourist in Europe pay more or less for a BigMac? Why?