Multiple Choice
The Big Mac Index uses the price of a Big Mac in local currencies around the world as a way of testing the purchasing power parity theory. Which of the following is a partial explanation for why the PPP theory does not apply to the Big Mac Index?
A) Wages do not differ across countries
B) Trade barriers, such as tariffs and quotas on beef, may distort local prices
C) Taxes do not distort local prices
D) Rent does not vary substantially across countries
E) The Big Mac is traded internationally
Correct Answer:
Verified
Correct Answer:
Verified
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