Using the Big Mac Index to Measure Inflation Because it contains beef, dairy (cheese), wheat (bun), cost of labor, and the cost of real estate, I believe it is a good representation of prices in the United States and abroad. It works by calculating the exchange rate that would leave a Big Mac costing the same in each country. ![]() The index is based on the theory of purchasing-power parity, which says that exchange rates should eventually adjust to make the price of a basket of goods the same in each country. The Big Mac Index basket contains just one item: the Big Mac hamburger. The Economist… created the Big Mac Index in 1986… was created to compare the price of currencies between different countries. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. ![]() This article is presented compliments of Key to Making Money!) and may have been edited (), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read.
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