Why is the Big Mac a good indicator of purchasing power parity?
What will be an ideal response?
The Big Mac is as close as possible to identical in every location throughout the world. Since it is not traded across borders, each price reflects location-specific economic conditions. Thus, comparison of actual to "predicted" exchange rates measures for each economy the influence of country-specific vs. global determinants of market prices.
You might also like to view...
Refer to Scenario 1 . If you start the course in such a way that each exam score is better than your previous average what should happen to your average score? What would happen to your average if it was below your previous exam score? Explain
What will be an ideal response?
Which of the following events will cause a downward movement along the value of marginal product of labor curve?
a. An increase in wage rate b. An increase in price of the product c. A decrease in wage rate d. A decrease in price of the product