![]() ![]() ![]() The Theory ExplainedĪt its most basic, the Big Mac Index is a way to gauge a currency’s over- or undervaluation using the Law of One Price, Purchase Power Parity, and the cost of the iconic Big Mac. Since then, the Big Mac Index has been used by the Economist Magazine to determine and track a currency’s over- or undervaluation by comparing the different prices we pay for the iconic Big Mac burger in various countries around the world. Not everyone finds macroeconomics as riveting a subject as we do here at Nomad Capitalist, but thanks to the Economist Magazine’s Big Mac Index, concepts like Purchasing Power Parity (PPP) and the Law of One Price are more interesting and accessible than ever before.ġ986 was an exciting year in the financial and economic world: Microsoft had its initial public offering, the British Government deregulated its markets in what became known as the “Big Bang,” and “Burgernomics” was born. ![]()
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