Big Mac Index
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The “Big Mac” Index has been published annually by The Economist magazine since 1986 as an informal way to measure the values of currencies around the world against the U.S. dollar.
GDP stands for gross domestic product and is the measure of the total economic output of the goods and services of a country.
A current account deficit occurs when a country spends more money on the goods and services it imports than it receives for the goods and services it exports.
Purchasing Power Parity (PPP) compares different countries' currencies through a market "basket of goods" approach. Two currencies are in PPP when a market basket of goods (taking into account the exchange rate) is priced the same in both countries.
Financialization is an increase in the size and importance of a country's financial sector relative to its overall economy.
The Consumer Confidence Index is the result of a monthly survey of 5,000 U.S. households by the Conference Board that measures how optimistic or pessimistic consumers are about the economy's current and future performance. When the index is high, consumers are expected to increase their spending on goods and services.
The wealth effect is a psychological phenomenon that causes people to spend more as the value of their assets rises. The premise is that when consumers' homes or investment portfolios increase in value, they feel more financially secure, so they increase their spending.
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