The Big Mac Index !

The Big Mac Index is an informal way of measuring the purchasing-power parity (PPP). This index is based on the theory of purchasing-power parity (PPP), which argues that exchange rates should equalize the average prices of an identical basket of goods and services in various countries (i.e., the ratio between exchange rates of various currencies). However, instead of a basket of goods, economists use a standard hamburger sold at McDonald’s restaurants all around the globe. This research has been conducted by Britain’s weekly newspaper Economist since 1986. The price of a Big Mac was chosen as a benchmark for two main reasons: McDonald’s food is available in most countries, and the hamburger itself contains enough grocery ingredients (such as bread, cheese, meat and vegetables) to be considered a uniform standard for agriculture products. Its price may vary in different countries depending on the volume of production, rental costs, spending on commodities, workforce expenses, and other factors.