@sinafaghanii: Have you ever wondered what the cost of an item you consume in one country would be abroad? If you have traveled abroad, you would have noticed that the price of the same goods varies between countries. For example, a Big Mac 🍔 costs $5.69 in the US, which is equivalent to €5.18. However, the cost of the same burger in the Euro area is €5.87. Do the math and you get $1 coming to just €0.91 compared to the €1.10 exchange rate. This is because the Big Mac is cheaper to produce in the Euro area. The cost of rent, salaries, etc., are much more affordable in the Euro area than in the US 🇺🇸, even though they produce the same burger. This is called the Big Mac Index, where the cost of Big Macs is used to determine the purchasing power parity (PPP). The PPP compares the value of all goods and services produced between two countries and ensures them with one another. By comparing PPP, we can compare income from different countries concerning your spending power. For context, the PPP between the US and the Euro area is $1 = €0.91. ✅ So the next time you are chowing down on a burger, remember this reel and that you’d have paid more for the same burger somewhere else. #sinafaghani #bigmacindex #economics #moneytalks #moneymotivated

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Monday 05 August 2024 11:16:51 GMT