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2022 ‫מועד קיץ‬ - 49 - ‫ פרק שני‬- ‫אנגלית‬

Text II (Questions 18-22)

(1) Currency rates of exchange are featured daily in the news. In Israel, every
newspaper and television news broadcast announces the value of the shekel in relation
to the U.S. dollar and the euro. This relationship is determined by complex political and
economic factors. Ideally, exchange rates should ensure that a product costs the same in

(5) different countries, but this is not always the case. In 1986, Pam Woodall of The
Economist devised the Big Mac Index, a light-hearted guide that can be used to
determine whether currency exchange rates actually equalize the price of an identical
product – a McDonald's Big Mac.

The Big Mac is the most popular hamburger served by McDonald's, a fast food
(10) chain with thousands of restaurants in over 130 countries. The Big Mac is supposed to

be identical in terms of size, taste, and ingredients, no matter where it is sold. Woodall's
index, published every year since 1986, lists the price of a Big Mac in each country's
currency, converts that price into U.S. dollars, and shows the exchange rate of each
country's currency to the dollar. Woodall hypothesized that comparing actual exchange
(15) rates with Big Mac prices signals whether a currency is undervalued or overvalued.

Of course, the Big Mac Index does have its shortcomings. A Big Mac's price
reflects more than just the cost of bread, meat, and vegetables. It also reflects other
expenses, such as rent and labor. There is no reason to expect that these would be the
same in different economic environments. Therefore, the Big Mac Index is probably

(20) most accurate when comparing countries at roughly the same stage of economic
development.

Questions

18. An appropriate title for this text would be -

(1) The Politics and Economics of Fast Food
(2) Is the Big Mac Overpriced?
(3) The Reliability of Currency Exchange Rates
(4) The Big Mac: An Unusual Economic Indicator

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