Interesting way to analyze currency but I would say the Bic Mac is not delicious.

Pop Culture Business Review

McDonald’s flagship sandwich—the Big Mac—is more than just delicious; it’s useful in analyzing the currency exchange rates between nations.

The Big Mac Index is used to evaluate whether currencies are at the “correct” level relative to each other. By gathering the real cost of Big Mac’s in various countries, the index is used to determine which currencies are higher and lower than the datum (e.g. US dollar). According to The Economist Magazine, the Big Mac Index

“is based on the theory of purchasing-power parity (PPP) which is, in the long run, exchange rates should adjust to equal the price of a basket of goods and services in different countries.”

In other words, a Big Mac in the US should cost as much as a Big Mac in France relative to the currency exchange rate. If it does not, the nations with higher Big Mac indices have over valued currencies and vice versa. In this chart

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2 Responses to

  1. I don’t disagree with you…but can millions and millions be wrong?

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