"The Big Mac index is The Economist's burger-based measure of whether currencies are over- or undervalued.... [E]xchange 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
C
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Comparing the U.S. balance of payments in 2012 to the rest of the world, we see that the
A) U.S. current account is similar in size to most developed nations and has a deficit. B) United States has the largest current account surplus. C) United States has the largest capital and financial account deficit. D) United States has the largest current account deficit. E) U.S. current account is similar in size to most developed nations and has a surplus.
Technological change brings a ________ to firms that adopt the new technology
A) permanent economic profit B) temporary economic profit C) permanent economic loss D) temporary economic loss E) temporary normal profit