If the Price for a Big Mac in the US

question 26

Multiple Choice

If the price for a Big Mac in the US is $2.00 and the price for a Big Mac in the UK is ₤3,what is the absolute purchasing-power parity equilibrium exchange rate between the dollar and the Euro (using the dollar as the domestic currency) ?

• A).667
• B)1.5
• C).333
• D)None of the above

---

Definitions:

Social Security

A government program that provides financial assistance to people who are retired, disabled, or survivors of deceased workers, funded through payroll taxes.

Medicare

A federal health insurance program in the United States for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease.

Payroll Tax

Taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.

Social Insurance Tax

Taxes imposed on employees and employers to fund public insurance programs, such as social security, health care, and unemployment benefits.