What is the main shortcoming of the Big Mac Index?
What will be an ideal response?
The Big Mac index is a simple example of a purchasing power parity adjustment. Its shortcoming is that instead of a bundle of diverse goods, this index only compares a bundle consisting of a single good, the Big Mac, which is only a small fraction of people's consumption. Thus, its price will not reflect true cost of living differences across countries.
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What is the essence of the problem of timeliness with fiscal policy?
A. Often there is not enough time to spend all of the money that fiscal policies have authorized. B. If fiscal policy is enacted too quickly, it might not be very well thought out. C. In order for fiscal policy to have an impact and prevent a recession, it needs to happen very quickly. D. The government's budget calendar is very strict and fiscal policy can only be done at certain times in the year.
Fill in the blank: Firms under perfect competition would enjoy ________ market power
A) absolutely no B) some C) much D) total