The Big Mac Index Is an Attempt to Measure

question 210

Multiple Choice

The Big Mac index is an attempt to measure

• A) purchasing power parity.
• B) the real exchange rate.
• C) the current account.
• D) the capital account.

---

Definitions:

Excess Reserves

Bank reserves that exceed the required minimum amount that financial institutions must hold in reserve against deposit liabilities.

Required Reserves

The minimum amount of reserves that a bank must hold as dictated by central banking regulations, typically a percentage of deposits.

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, that lenders charge borrowers for the use of their funds.

Federal Reserve

The central banking system of the United States, responsible for setting monetary policy, regulating banks, maintaining financial stability, and providing banking services.