This 7-page paper focuses on economic exchange theory through concepts known as the Big Mac Index and Burgernomics, both of which are considered light-hearted, but surprisingly accurate as they delve into purchase parity power in countries around the world. Also discussed is the overvaluation of the euro when first introduced during the lat 1990s. Bibliography lists 4 sources.
Name of Research Paper File: D0_MTbigmac.rtf
Unformatted Sample Text from the Research Paper:
is interesting for the international economists, it tends to be boring for everyone else; noting, for example, that the euro was overvalued against the dollar and continuing to rise further
means absolutely nothing to the average Joe who is planning a trip to Europe and simply needs to know how many euros he can get for his U.S. dollar.
This is where the Big Mac index and the theory of Burgernomics comes in. Named after that McDonalds product - "two all-beef-patties, special
sauce, lettuce, cheese, pickles, onions on a sesame bun" - the Big Mac index originally started out as kind of a funny prank by a well-respected economics magazine. Yet the
index made so much sense, that the index is ceasing to be funny and is, instead, giving a good (if not thorough) insight as to what the economy is actually
doing. In this paper, well examine the Big Mac theory and Burgernomics in detail to determine its accuracy. The paper also contains
a discussion about the euro and its valuation against the U.S. dollar (which the Big Mac theory has also demonstrated). What is the Big Mac Theory?
Introduced by The Economist magazine during the late 1980s, the Big Mac index tries to examine if currencies are at the correct levels, based on what
is termed "purchasing-power parity," or PPP (The Economist, 2002). Under the general definition of PPP, baskets of goods and services are examined
across all countries, to determine how the exchange rates would adjust to equalize the price of those goods and services (The Economist, 2002). The principle behind the Big Mac index