When the Economist Magazine Runs Articles Using the Big Mac

question 172

Multiple Choice

When The Economist magazine runs articles using the Big Mac hamburger to value exchange rates, it is using the principle of

• A) exchange arbitrage.
• B) market expectations.
• C) purchasing power parity.
• D) interest rate parity.

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Definitions:

Normal Standards

Benchmarks used for budgeting and performance evaluation, representing expected efficiency and costs under normal conditions.

Direct Labor Time Variance

The difference between the expected time to produce a product or service and the actual time taken, often used to measure efficiency.

Actual Staff Hours

Actual staff hours are the real number of hours worked by employees, as recorded for payroll or project management purposes, distinct from scheduled or estimated hours.

Standard Rate Per Hour

The set amount paid for an hour of work, often used in budgeting labor costs for projects or operations.