Archive Big Mac used to value foreign exchange rates VALUE MEAL McDonald's burger serves as indicator of international currency values Published Jul. 21 2009 2:18PM EDT ...

Cue the Big Mac. McDonald’s staple burger has been used by economists since the 1980s to help track how much of one currency is equal to another, as The Economist (the creator of the index) reports.

E ACH YEAR a typical American worker can afford more than six times as many Big Macs at home as a worker in Mexico can. That ...

It stuck. The Big Mac Index is based on the economic concept of purchasing power parity, which tries to adjust prices in different countries to account for differences in exchange rates.

While the price of a Big Mac is nearly equal to that in the US in Costa Rica and Israel, currency undervaluation can reach extreme levels—down to 57% in Indonesia and 57.9% in Egypt.

Here’s how it works, according to The Economist: “the average price of a Big Mac in America in July 2016 was $5.04; in China it was only $2.79 at market exchange rates.

“A Big Mac costs $12,950 in Colombia and US$5,81 in the United States. The implied exchange rate is $2,228,92.

PAUL SOLMAN: So very roughly, a Big Mac should cost the same everywhere once you adjust for foreign exchange rates. If it costs a lot more or a lot less, that suggests the exchange rate may be out ...

THE Big Mac Index is The Economist 's light-hearted guide to exchange rates. The index is based on the theory of purchasing-power parity, which says that exchange rates should move to make the ...

During the same year, the price of a Big Mac also jumped at the same rate. If you’re purchasing a Big Mac meal with fries and a drink, you could end up paying $8 to $10 depending on where you ...