What is the main shortcoming of the Big Mac Index?
What will be an ideal response?
The Big Mac index is a simple example of a purchasing power parity adjustment. Its shortcoming is that instead of a bundle of diverse goods, this index only compares a bundle consisting of a single good, the Big Mac, which is only a small fraction of people's consumption. Thus, its price will not reflect true cost of living differences across countries.
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Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
The law of supply states that there is a positive relationship between price and quantity supplied, ceteris paribus
Indicate whether the statement is true or false
Explain the two basic mechanisms that increase GDP per capita over the long term
What will be an ideal response?
An economy that experiences a rise in the price level over two consecutive quarters necessarily experiences
A) a recession. B) deflation. C) disinflation. D) none of the above.