What in reality do you find? What are your burger-nomic findings for burgers and what does that tell us? And then there was this idea that even the non-tradable stuff should flow into cost in such a way that goods cost the same eventually, because currencies are valued based on what they can buy at home. So if you can buy more Macs in one country and less in another, that suggests something’s out of whack. But of course the components - the beef, the bread - can be traded. I don’t think a Big Mac that has been shipped across the Atlantic is going to taste very nice. It’s a bit more complicated when it comes to Big Macs. But generally, trade means that prices come into line. The first thing to think about is what happens when goods are traded across borders, and that is that prices are brought into line, because if oil, say, costs a lot in America, but costs less elsewhere, then you could make a lot by shipping oil across the Atlantic and you’d have to adjust the transport cost of doing that. The Big Mac Index compares how much a McDonald’s hamburger costs in different countries, and it’s based on the idea that a burger in two countries or any good in two countries should cost the same. The publication’s economics editor, Henry Curr, joined us to discuss how it works and why a strong dollar isn’t necessarily a good thing. The index, developed by The Economist, currently suggests that the U.S. It measures the difference between the price of a Big Mac in different countries to help us understand how different currencies are performing against each other. We go through a lot of economic indicators on this program, but only one can claim to be the tastiest of them all: The Big Mac Index.
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December 2022
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