Foreıgn Trade Deneme Sınavı Sorusu #1405866

Which of the followings is considered a way to determine the correct level of currencies, based on the theory of purchasing-power parity (PPP)?


Interest parity condition.

Spot quotations.

The inflationary expectations.

The Fisher Equation.

The Big Mac index.


Yanıt Açıklaması:

The Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalize the prices of an identical basket of goods and services (in this case, a burger) in any two countries. Therefore, the correct option is E.

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