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2 years ago

What are the disadvantages of using big macs to measure purchasing power parity? (check all that apply.)?

2 answers:

5 0

The Economist magazine in the year 1986, proposed a new index as an alternate measure for exchange rate. This new index studies the price of a Big Mac and compares them to calculate exchange rates. It was argued that McDonald was already established in many countries. Therefore, it can be used as a yardstick to compare the purchasing power of various countries. Hence, serves as a measure of purchasing power party. The main problem with this as that not everybody’s consumption basket includes Bug Macs. Rather, a fraction of the total population consumes it. Instead of representing a basket of diverse goods, it represents a basket consisting of a single commodity. As a result, Big Mac index will not reflect true cost of living.

AnnZ [28]2 years ago

4 0

While a familiar benchmark, the number of people who know of Big Macs are not comparable to those who buy them regularly. Thus, comparing a not-as-commonly purchased product with living essentials (such as staple foods and toiletries) provides a level of disconnect that hinders the very comparison it is intended to support.

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The expected return and standard deviation of a portfolio that is 30 percent invested in 3 Doors, Inc., and 70 percent invested

kirill115 [55]

Answer:

For correlation 1 the standard deviation of portfolio is 0.433.

For correlation 0 the standard deviation of portfolio is 0.3191.

For correlation -1 the standard deviation of portfolio is 0.127.

Explanation:

The standard deviation of a portfolio is computed using the formula:

$\sigma_{P}=\sqrt{w^{2}_{1}\sigma_{1}^{2}+w^{2}_{2}\sigma_{2}^{2}+2\times r\times w_{1}\sigma_{1}w_{2}\sigma_{2}}$

(1)

For r = + 1 compute the standard deviation of portfolio as follows:

$\sigma_{P}=\sqrt{w^{2}_{1}\sigma_{1}^{2}+w^{2}_{2}\sigma_{2}^{2}+2\times r\times w_{1}\sigma_{1}w_{2}\sigma_{2}}\\=\sqrt{(0.30^{2}\times 0.51^{2})+(0.70^{2}\times 0.40^{2})+(2\times1\times0.30\times 0.51\times0.70\times 0.40)}\\=\sqrt{0.187489}\\=0.433$

Thus, for correlation 1 the standard deviation of portfolio is 0.433.

(2)

For r = 0 compute the standard deviation of portfolio as follows:

$\sigma_{P}=\sqrt{w^{2}_{1}\sigma_{1}^{2}+w^{2}_{2}\sigma_{2}^{2}+2\times r\times w_{1}\sigma_{1}w_{2}\sigma_{2}}\\=\sqrt{(0.30^{2}\times 0.51^{2})+(0.70^{2}\times 0.40^{2})+(2\times0\times0.30\times 0.51\times0.70\times 0.40)}\\=\sqrt{0.101809}\\=0.3191$

Thus, for correlation 0 the standard deviation of portfolio is 0.3191.

(3)

For r = -1 compute the standard deviation of portfolio as follows:

$\sigma_{P}=\sqrt{w^{2}_{1}\sigma_{1}^{2}+w^{2}_{2}\sigma_{2}^{2}+2\times r\times w_{1}\sigma_{1}w_{2}\sigma_{2}}\\=\sqrt{(0.30^{2}\times 0.51^{2})+(0.70^{2}\times 0.40^{2})+(2\times-1\times0.30\times 0.51\times0.70\times 0.40)}\\=\sqrt{0.016129}\\=0.127$

Thus, for correlation -1 the standard deviation of portfolio is 0.127.

3 0

2 years ago

Nation A builds a new highway next to citizens’ properties. In the months following, littering as well as several highway accide

nikitadnepr [17]

Answer:

the government's sovereign immunity

Explanation:

In the US, the federal and state governments have sovereign immunity which means that they cannot be sued unless they agree to it. In the US, the federal government waived their immunity protection from a series of possible torts through the Federal Tort Claims Act. But that law does not include litter or accidents occurring in highways.

Sovereign immunity basically states that the federal government cannot be sued for its actions unless those actions are included in the Federal Tort Claims Act. To be able to sue a state government other rules apply, specially regarding the circumstances around the reason for the claim.

7 0

2 years ago

If a person drives an automobile, they are required by law to have automobile liability insurance. in which situation would this

Lemur [1.5K]

If the driver were to get into a crash or accident that was not their fault

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2 years ago

Consider the following information about a simple country that produces two different goods: Year PriceMilk QuantityMilk Price C

Tema [17]

Answer:

Nominal GDP in 2014 was $1000

Nominal GDP in 2015 was $1665

Nominal GDP in 2016 was $2500

Explanation:

Nominal GDP is the market value of goods and services produced in an economy, un-adjusted for inflation.

NGDP= Q x P

Where

Q= quantity

P= price

Nominal GDP in 2014

NGDP(2014)=$4x 100+ $5 x120

NGDP(2014)=$1000

Nominal GDP in 2015

NGDP(2015)= $4.50x 150+ $5.50x 180

NGDP(2015)=$1665

Nominal GDP in 2016

NGDP(2016)= $5x 200 +$6.00x 250

NGDP(2016)= $2500

7 0

3 years ago

Which is the shortest and simplest tax form?

AfilCa [17]

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That's why you should use the simplest tax return form you can, especially if you're still filling out your forms by hand.

But choose carefully. There are three personal income tax forms -- 1040, 1040A and 1040EZ -- with each designed to get the appropriate amount of your money to the IRS. Differences in the forms, however, could cost you if you're not paying attention.

The EZ is the shortest and simplest form, Form 1040A is a bit more complex and the long Form 1040 is the most detailed and potentially difficult. But even if your tax life is simple and straightforward, it might be worthwhile to investigate the other two forms. Why? Generally, the longer the form, the more opportunities for tax breaks.

6 0

2 years ago

What are the disadvantages of using big macs to measure purchasing power​ parity? ​(check all that apply.​)?

What are the disadvantages of using big macs to measure purchasing power parity? (check all that apply.)?