The Economist's Big Mac index seeks to make exchange-rate theory more digestible. It is arguably the world's most accurate financial indicator to be based on a fast-food item.
The Big Mac Index
HOW fast is the world economy growing? How important is China as an engine of growth? How much richer is the average person in America than in China? The answers to these huge questions depend crucially on how you convert the value of output in different countries into a common currency. Converting national GDPs into dollars at market exchange rates is misleading. Prices tend to be lower in poor economies, so a dollar of spending in China, say, is worth a lot more than a dollar in America. A better method is to use purchasing-power parities (PPP), which take account of price differences.
The theory of purchasing-power parity says that in the long run exchange rates should move towards rates that would equalize the prices of an identical basket of goods and services in any two countries. This is the thinking behind The Economist's Big Mac index. Invented in 1986 as a light-hearted guide to whether currencies are at their “correct” level, our “basket” is a McDonalds' Big Mac, which is produced locally in almost 120 countries.…
Big Mac index n.大麥當勞指數(用來比較在世界各國,一般的工薪族需工作多長 時間才能掙得買一個大麥當勞漢堡的錢)
Exchange rate 匯率(統稱)
convert into 轉變,變換
GDP abbr. gross domestic product 國內生產總值
purchasing-power parities (PPP) 購買力組織
take account of ph. 考慮到;體諒
basket n. 籃,簍,筐
light-hearted =lighthearted a. 輕鬆愉快的,無憂無慮的/隨便的,漫不經心的