student: does the dog have a buddah nature ?
master : mu 

this reminds me of the schrodingers cat theory. neither alive or dead until observed. but the master says, much more. he say's it does not matter. who cares! 

it makes no difference if the dog has buddha nature or not, the cat is alive or dead, it does not matter and therefore mu means un-ask the question. there is no yes no answer. one's mind must move from simple binary answers to some other form of intuition or awareness.  
often the master will answer the question with a yes, or sometimes a no. but the answer is really mu.
so unless you look inside the box and see the cat, it is a pointless question with no answer. 
these zen monks were pretty smart.