The Big Mac Index (Coursework Sample)
TOPIC INTERNATIONAL ECONOMICS
PAPER TYPE COURSEWORK
SINGLE SPACED NO
SUBJECT AREA MATHEMATICS & ECONOMICS
WRITING LEVEL MASTER
WRITING STYLE APA
LANGUAGE ENGLISH (U.S.)
SOURCES 1
CPP $8
PAGES 1 PAGE(S) / ≈ 275 WORDS
TOTAL $8
DEADLINE 10H 14M
STATUS ASSIGNED
Go to The Economist website and search for the Big Mac Index for a recent time period. Compare the Purchasing Power of the United States with another country. Try to choose a country with which you are not very familiar. What does this parity say about the potential standard of living in the country you chose? What does it say about the potential wage level? https://www.economist.com
Reference and Cite needed.
The Big Mac Index
The Big Mac Index is a system of determining whether the markets are undervalued or overvalued. This can be achieved by comparing the currencies worldwide with the common standards of Big Mac. The economists convert the national prices twice a year into U.S. dollars. Although the Big Mac is a standardized item worldwide, the relative cost in each country should also be the same. According to the 2022 Big Mac Index, currently, Switzerland possesses expensive Big Macs of about 6.98 U.S. dollars. Comparatively, the cost in the U.S. was 5.81 dollars, while the euro area had approximately 4.95 U.S. dollars.
Purchasing power parity (PPP) is a theory that economically compares the currencies of different countries using an approach of a “basket of goods.” (Chen & Devereux 2003). PPP helps in comparing the living standards and economic productivity between countries. Comparing the U.S. and China PPP, both countries are the largest economies globally. As this is not the case, the US has the highest PPP of $6.033 billion compared to China, whose economy was $3.982 billion.
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