The Big Mac Index

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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 [sic] the prices of an identical basket of goods and services (in this case, a burger) in any two countries.

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