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T O P I C R E V I E W
tericee
Posted - 01/12/2005 : 12:10:45 PM I just learned about this when I was in Finland. I was telling somebody that I like to try McDonald's in every country I go to since one of my best friends works for the corporation as a marketing exec. Anyway, I looked it up when I got home and here's what I found:
"The Economist's Big Mac index is based on the theory of purchasing-power parity (PPP), the idea that exchange rates should move to equalise the prices of a basket of goods and services across different countries. Our basket is the Big Mac. For example, the cheapest burger in the chart is in China, at $1.26, compared with an average American price of $3. This implies that the yuan is 58% undervalued relative to its Big Mac dollar-PPP. On the same basis, the euro is 25% overvalued, the yen 17% undervalued."
