Author Question: The Big Mac index is The Economist's burger-based measure of whether currencies are over- or ... (Read 73 times)

genevieve1028 · **on:** Jun 29, 2018

The Big Mac index is The Economist's burger-based measure of whether currencies are over- or undervalued.... Exchange rates should eventually adjust to make the price of a basket of goods the same in each country.

Our basket contains just one item: the Big Mac hamburger, which is pretty much the same around the world. The Economist, July 28, 2012 Which principle is The Economist relying on when using the Big Mac to value exchange rates? A) interest rate parity
B) market price parity
C) purchasing power parity
D) exchange rate parity

Question 2

The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is 2 per gallon, then the gallon that gives Dana exactly zero consumer surplus is

A) the 8th gallon.
B) the 12th gallon.
C) the 16th gallon.
D) the 20th gallon.