The Economist - Big Mac Index
From department of fun economics: The Economist puts out their Big Mac Index every few months, which they claim is “the world’s most accurate financial indicator to be based on a fast-food item.” The Big Mac Index is a measurement of a currency’s purchasing power based on the price of a Big Mac in that country. The idea is that since a Big Mac is the same in every country (obviously not the case, but close enough) then you should be able to derive an exchange rate, compare it to the actual exchange rate, and figure out if a currency is over or undervalued.
Here’s the latest Big Mac index from June 5th, 2005.
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There are 1 comments, add your thoughts now!
I wish my economics professor two semesters ago had been able to come up with a concrete example like the Big Mac index. Instead, he blathered on about wheat and corn, and something called elasticity.
Seriously, though, cool concept.
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