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Friday, February 15, 2008

Big Mac Index – Demonstration of PPP Purchasing-Power Parity

The Big Mac Index was introduced by The Economist in September 1986. The goal of the Big Mac Index is to demonstrate PPC Purchasing Power Parity. The concept of PPP is “that the exchange rates between two currencies should naturally adjust so that the cost of a sample basket of goods should cost the same in one currency (bigmac.biz). Basically, it tells you whether or not a countries currency is overvalued or not. After the Economist introduced the Big Mac Index this created a new term called Burgernomics. The Economist later introduced the Tall Latte index.

See the full Big Mac Index

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