The Big Mac Index Suggests That Exchange Rates Should Leave

question 68

True/False

The Big Mac Index suggests that exchange rates should leave Big Mac hamburgers costing the same in the U.S.as abroad.

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Definitions:

Surplus

The amount of an asset or resource that exceeds the portion that is actively utilized; in economic context, it often refers to excess production or budgetary surplus.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or commodity, often to protect consumers.

Price Floor

A government or regulatory-imposed minimum price set for a particular good or service, below which it cannot be sold, often to protect producers or encourage production.

Surplus

The situation in which the quantity of a good or service supplied exceeds the quantity demanded at the existing price.