The "Big Mac Theory of Exchange Rates" Tests the Accuracy

question 45

Multiple Choice

The "Big Mac Theory of Exchange Rates" tests the accuracy of the purchasing power parity theory.In July 2011, the Economist reported that the average price of a Big Mac in the U.S.was $4.07.In Mexico, the average price of a Big Mac at that time was 32 pesos.What is the "implied exchange rate" between the peso and the dollar?

• A)1.30 pesos per dollar
• B)4.17 pesos per dollar
• C)7.86 pesos per dollar
• D)12.72 pesos per dollar
• E)14.36 pesos per dollar

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Definitions:

T Tubule

T Tubules, or transverse tubules, are extensions of the cell membrane that penetrate into the center of skeletal and cardiac muscle cells, playing a crucial role in muscle contraction.

Sliding Filament Model

A theory describing the mechanism of muscle contraction, where actin and myosin filaments slide past each other to shorten the muscle fiber length.

Sarcomere

The basic unit of a muscle's cross-striated myofibril, responsible for the muscle's contractile properties.

Actin

A protein that forms filaments and is involved in various types of cell movement and structure, including muscle contraction and cell division.