The Economist Publishes Annually the "Big Mac Index" by Which

question 23

Multiple Choice

The Economist publishes annually the "Big Mac Index" by which they compare the prices of the McDonald's Corporation's Big Mac hamburger around the world. The index estimates the exchange rates for currencies based on the assumption that the burgers in question are the same across the world and therefore, the price should be the same. If a Big Mac costs $2.54 in the United States and 294 yen in Japan, what is the estimated exchange rate of yen per dollar as hypothesized by the Hamburger index?

• A) $0.0086/¥
• B) ¥124/$
• C) $0.0081/¥
• D) ¥115.75/$

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Definitions:

Indifference Curve

A graph showing different combinations of two goods among which a consumer is indifferent.

Increase in Income

A situation where an individual or entity experiences a rise in their earnings or revenue over a period.

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Electronic games involving interaction with a user interface to generate visual feedback on a video device.

E-books

Digital versions of books that can be read on electronic devices such as e-readers, tablets, or computers.