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

question 45

Essay

The "Big Mac Theory of Exchange Rates" tests the accuracy of purchasing power parity theory.In July 2011,the Economist reported that the average price of a Big Mac in the United States was $4.07.In Mexico,the average price of a Big Mac at that time was 32 pesos.If the exchange rate between the dollar and the peso was 13.60 pesos per dollar,how would purchasing power parity predict the exchange rate will change in the long run? Support your answer graphically.

Comprehend the factors that predict unethical behavior.

Understand the implications and responses to the use of unethical tactics in negotiations.

Understand and identify different types of power within group leadership.

Recognize the psychoanalytic concepts of transference and countertransference in group leadership.

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Definitions:

Standards of Living

The level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.

Post-traumatic Stress Disorder

A psychiatric disorder that can occur in people who have experienced or witnessed a traumatic event, characterized by flashbacks, nightmares, severe anxiety, and uncontrollable thoughts about the event.

Flashbacks

A sudden and intense re-experiencing of past memories or events, often associated with traumatic experiences.

Impulsive Outbursts

Sudden, unplanned expressions of emotion or action without thought of the potential consequences.