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Suppose That the Price of a Big Mac Is a Good

question 298

Essay

Suppose that the price of a Big Mac is a good approximation of the price level in the country. A Big Mac costs £2 in London and $3 in New York.
a) If purchasing power parity holds, what is the exchange rate between the U.S. dollar and the British pound?
b) If the current exchange rate is $1.6 per pound, what is the dollar price of a Big Mac in London? What do you will happen to the exchange rate? Explain.
c) The exchange rate between the U.S. dollar and the Russian ruble is 30 rubles per dollar. If purchasing power parity holds, what is the price of a Big Mac in Moscow?


Definitions:

Self-Blaming

The tendency to attribute personal failures or negative events to one's own inadequacies or actions.

Parental Disagreements

Conflicts between parents on aspects of parenting or decisions regarding their children's upbringing.

Self-Esteem

The subjective evaluation of one's own worth or value as reflected in personal perceptions of traits, skills, and qualities.

Concordance

The agreement or harmony between people or things; in genetics, it refers to the presence of the same trait in both members of a pair of twins or in sets of individuals.

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