"The Big Mac Index Is the Economist's Burger-Based Measure of Whether

question 47

Multiple Choice

"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 principal 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

---

Definitions:

Oxygen Level

The concentration of oxygen in a particular environment or medium, typically referring to its amount in the blood.

Internal Carotid Arteries

Major arteries in the head that supply blood to the brain, eyes, and other parts of the head.

Vertebral Arteries

Arteries that supply blood to the upper part of the spinal column, neck, and lower part of the brain.

Blood Pressure

Blood pressure is the force exerted by circulating blood upon the walls of blood vessels, crucial for body function.