Spread of crisis in one country to neighboring countries

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Reference no: EM132021685

1. The Economist publishes annually the "Big Mac Index" by which they compare the prices of the McDonald's Corporation's Big Mac hamburger around the world. The index estimates the exchange rates for currencies based on the assumption that the burgers in question are the same across the world and therefore, the price should be the same. If a Big Mac costs $2.54 in the United States and 294 yen in Japan, what is the estimated exchange rate of yen per dollar as hypothesized by the Hamburger index?

a. $0.0086/¥

b. ¥115.75/$

c. $0.0081/¥

d. ¥124/$

2. ________ is defined as the spread of a crisis in one country to its neighboring countries and other countries with similar characteristics.

a. Speculation

b. Contagion

c. Capital market liquidity

d. Political science

Reference no: EM132021685

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