The big mac index

Basically it uses something that is consistent all over the world to compared the purchasing power of the local currency against the US dollar.

It would seem the aussie dollar is undervalued.

That's quite interesting and clever :)

i got a chubby over that

The economist started that mainly as a novelty thing, you can't read very much into that.

economics is so sexy!

Why can't you much into that ?

I mean it gives you some relativity in to the value of a big mac.

It would be even more relavent if you compared it to average wage and working conditions atached to the wage. So you measure it against how many hours you have to work to get the big mac.

We got taught it in uiversity Economics, its pretty legit, a good indicator.

its pretty legit, a good indicator

Unless a branch decides to use cheap foriegn mad cows for beef, then we're all going to die.

ja, been out for a while. i still use it when people ask "isnt stuff expensive in london?"

I always thought it'd be LOL if a poorer nation artifically set the price of their big macs to make their economy seem more attractive and grow because of more foreign investment

yeah, they do use it in economics courses. I'd know, i'm doing a bachelor of economics. My point is that while it compares a standard item (can be argued that it is a basket of items - eg. lettuce, meat, bread etc), the item is subject to mcdonalds pricing policy, which varies greatly from region to region. Also, the cost of food vaires around the globe as a percentage of avg wage. Also, it only represents a specific band of low-skill labour which doesn't represent the entire labour market in the way a standard price index attempts to. So what am I getting at.. Is the big mac index useless? No, of course not. It's a simple, easy to understand index which shows the differences in values of both goods and services and currencies around the world. But to say the aussie dollar is undervalued because the prices of big macs are different around the world is completely wrong.

yay, im off switzerland next week.