The "Big Mac Theory of Exchange Rates" tests the accuracy of the purchasing power parity theory. In July 2015, the Economist reported that the average price of a Big Mac in the U.S. was $4.79
In Sweden, the average price of a Big Mac at that time was 43.7 kronor. What is the "implied exchange rate" between Swedish kronor and U.S. dollars?
A) 0.11 kronor per dollar B) 1.90 kronor per dollar
C) 9.12 kronor per dollar D) 46.2 kronor per dollar
C
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In 2013, the reference base period for the CPI for the nation of Wobet, a typical consumer spent $30 on potatoes and $150 on steak. Which of the following is true?
A) The quantity of steak in the basket is larger than the quantity of potatoes. B) The quantity of potatoes in the basket is larger than the quantity of steak. C) The quantity of the two goods in the basket is the same. D) We cannot say exactly how many of each good are in the basket. E) None of the above answers is correct.
The supply curve for portable charcoal grills shifts
a. only when production technology changes. b. when a determinant of the supply of portable charcoal grills other than the price of portable charcoal grills changes. c. when any determinant of the supply of portable charcoal grills changes. d. only when the number of sellers of portable charcoal grills changes.