{"id":643,"date":"2007-06-03T13:31:56","date_gmt":"2007-06-03T13:31:56","guid":{"rendered":"http:\/\/www.intmath.com\/blog\/?p=643"},"modified":"2009-08-19T13:54:23","modified_gmt":"2009-08-19T05:54:23","slug":"the-big-mac-index","status":"publish","type":"post","link":"https:\/\/www.intmath.com\/blog\/mathematics\/the-big-mac-index-643","title":{"rendered":"The Big Mac index"},"content":{"rendered":"<div class=\"imgRt\"><img src=\"\/blog\/wp-content\/images\/2007\/06\/bigmac.gif\" alt=\"big mac\" \/><br \/>A BIg Mac in Japan costs<br \/> 280 yen, or US$2.31.<\/div>\n<p>My sister-in-law is on her way to the UK. She asked a good question: \"How much does one British Pound buy, anyway? How does it compare with the Australian dollar (currently worth about 41p, or 0.41 pounds)?\"<\/p>\n<p>I told her about the Big Mac index, which The Economist magazine suggests is a way to compare the actual value of currencies. <\/p>\n<p>The Economist.com says in <a href=\"http:\/\/www.economist.com\/node\/8649005\">The Big Mac Index article<\/a>:<\/p>\n<blockquote>\n<p>The Economist&rsquo;s Big Mac index is based on the theory of purchasing-power parity (PPP), according to which exchange rates should adjust to equalise the price of a basket of goods and services around the world. Our basket is a burger: a McDonald&rsquo;s Big Mac.<\/p>\n<\/blockquote>\n<p>The rates as per Feb 2007 indicate that a Big Mac in Australia costs US$2.67. In Britain, a Big Mac costs US$3.90. So it means my sister-in-law will be forking out around 50% more of her Australian dollars than she would for similar items in Australia.<\/p>\n<p>The article has the following disclaimer:<\/p>\n<blockquote>\n<p>[The Big Mac index] is only a rough guide, because its price reflects non-tradable elements such as rent and labour.<\/p>\n<\/blockquote>\n<p>Rough it may be, but it is valuable in determining the relative value of currencies.<\/p>\n<p class=\"alt\">See the <a href=\"https:\/\/www.intmath.com\/blog\/mathematics\/the-big-mac-index-643#comments\" id=\"comms\">4 Comments<\/a> below.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What can you buy in another country with one British pound? One US dollar? One Australian dollar? The Big Mac index is one way to compare the relative value of currencies.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":""},"categories":[4],"tags":[125],"_links":{"self":[{"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/posts\/643"}],"collection":[{"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/comments?post=643"}],"version-history":[{"count":0,"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/posts\/643\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/media?parent=643"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/categories?post=643"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/tags?post=643"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}