Investing
VIDEO: How the Big Mac Index can affect your travel decisions…
The Big Mac index is the Economist’s light-hearted take on how exchange rates and local costs affect what you can buy when you go abroad.
The Economist has been publishing the Big Mac Index since 1986 as a ‘semi-humourus’ way to calculate the values of currencies around the world against the American dollar using the theory of purchasing power parity.
The idea is that the ingredients of a Big Mac are the same across the globe, and therefore is a good product to use to explain how the ‘exchange-rate theory’ really works.
The video (below), from currency specialists Travelex, explains to travellers how they can use the Big Mac index to see just how far their currency will go when they’re on holiday…
The Big Mac Index Explained via Travelex
Here is the actual Big Mac index on the Economist’s website…
