Suppose That the Price of a Big Mac Is a Good

question 485

Essay

Suppose that the price of a Big Mac is a good approximation of the price level in the country. A Big Mac costs £2 in London and $3 in New York.
a) If purchasing power parity holds, what is the exchange rate between the U.S. dollar and the British pound?
b) If the current exchange rate is $1.6 per pound, what is the dollar price of a Big Mac in London? What do you predict will happen to the exchange rate? Explain.
c) The exchange rate between the U.S. dollar and the Russian ruble is 30 rubles per dollar. If purchasing power parity holds, what is the price of a Big Mac in Moscow?

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Definitions:

Adolescence

is the transitional stage of physical and psychological development that generally occurs during the period from puberty to legal adulthood.

Gender Socialization

The process by which individuals learn the cultural norms and expectations associated with their gender through social institutions like family, education, and media.

Feminization

Feminization refers to the process of attributing feminine characteristics to something, often observed in societal, cultural, or economic contexts, such as the feminization of poverty or occupations.

Educational Aspirations

The hopes or ambitions of achieving a certain level of education or learning.