THE BIG MAC index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries.

Big Mac® 7.5 oz (214 g) 540 260 29 45 10 50 1.5 43 45 15 3 13 9 25 6 2 25 25 Big N' Tasty®. Apple MacBook Pro 5,1 A1286 Core 2 Duo 2.4GHZ 4GB RAM 500GB 15' 2008 MB470LL/A 4.5 out of 5 stars (44) 44 product ratings - Apple MacBook Pro 5,1 A1286 Core 2 Duo 2.4GHZ 4GB RAM 500GB 15' 2008 MB470LL/A. To make a McDonald's Big Mac, start by combining mayonnaise, French salad dressing, relish, mustard, vinegar, sugar, onion powder, garlic powder, and paprika to make the special sauce. Then, toast 3 hamburger buns and spread the sauce on one side of each bun.

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Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of dozens of academic studies. For those who take their fast food more seriously, we also calculate a gourmet version of the index.

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The GDP-adjusted index addresses the criticism that you would expect average burger prices to be cheaper in poor countries than in rich ones because labour costs are lower. PPP signals where exchange rates should be heading in the long run, as a country like China gets richer, but it says little about today's equilibrium rate. The relationship between prices and GDP per person may be a better guide to the current fair value of a currency.

Read more about the Big Mac index in “Out of joint: What the Big Mac index tells you about currency wars”. You can also download the data or read the methodology behind the Big Mac index here.

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Note: The GDP-adjusted index was updated in January 2021 to include more countries.

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