The McDonald's chain of restaurants and their signature product (Big Mac) appeared in the United States. Formula for calculating the Big Mac index
A compromise decision was made in 2011: the index is calculated on the basis of Maharaja Mac - a product containing chicken instead of beef.
#How much does a big mac cost in india how to
It is noteworthy that for a long time many economists did not know how to calculate the Big Mac index to assess the "fair" value of the Indian rupee, since in this country, for obvious reasons, it is impossible to buy a burger with a beef patty. It clearly demonstrates how expensive currency is for the country's economy. The Big Mac index is a convenient way to determine the discrepancy between the values of the currencies of countries with similar income indicators (especially in times of crisis). Big Mac has meat, bread, cheese, vegetables. Secondly, the composition of this product includes such a quantity of food components, which is sufficient to consider it a so-called mold of the national economy. Firstly, restaurants of the famous fast food chain are located in almost every country in the world. Why was the Big Mac taken as the basis for the calculations? The economists who proposed the Big Mac Index replaced the shopping cart with the single most popular product around the world. Additional parameters (the level of income of citizens of the state, the cost of transporting products, and others) are not taken into account. Based on this equality, a "fair" exchange rate is calculated.
The PPP theory says that identical goods in different countries should cost about the same. That is, the required value is 500/25 = 20 rubles. The fair exchange rate for the dollar to the Russian ruble is equal to the quotient of dividing the amount spent in the Russian Federation by the amount spent in the United States. To buy identical products (in the same quantity) in a US supermarket, they spend $ 25. For example, in a Russian supermarket they spent 500 rubles on the purchase of bread, milk and meat. BMI is based on the theory that the prices of a basket of similar goods of two countries are compared to calculate the real exchange rate. What is the Big Mac Index?īig Mac Index (BMI) is a special parameter used to determine PPP (purchasing power parity). Is there an easier way to measure purchasing power? Yes, and it was featured in The Economist back in 1986. These terms are difficult for ordinary people to understand. Using all this data, economists determine the quality of life of ordinary citizens. To assess the economy of the state as a whole, many complex indicators and terms are used: inflation, denomination, GDP, employment, and many others. What is BMI and how to calculate the Big Mac Index? Why was this particular McDonald's product taken as the basis for some economic calculations? Is the Big Mac Index applicable for Forex market analysis? I wrote an article that answers all of these and some other important questions.
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