Today we are going to look at the Big Mac Index.
Usually we look at the exchange rate if we want to compare USD to RMB.
But is this really the best way to compare currencies?
The exchange rate does not show what you can actually buy in a country with their currency.
Comparing how much you can buy, a currency's purchasing power, is confusing.
So, in 1986, as a joke, Jane Woodall, created the Big Mac Index.
She chose the Big Mac because it was a product available around the world.
However, there are some problems with the Big Mac Index.
Tariffs, for instance, can make foreign products more expensive than local products.
Also, there are very few McDonald's restaurants in Africa.
In Africa, a KFC Index is used instead.
★重点单词：Key words
Exchange rate:汇率
Compare:比较
Currencies:货币
Purchasing power:购买力
Confusing:令人困惑
Available:可买的
Tariffs:关税
Foreign products:国外产品
Expensive:贵
For instance:例如
Instead:代替
If we pretend, we have $50 we can look at each country on the Big Mac Index.
In the USA, $50 will only get you 8.8 Big Macs.
Almost nine Big Macs, but since you cannot buy 80% of a Big Mac, you will need to spend that money on French
In Switzerland, $50 will only buy 7 Big Macs.
In Japan $50 will get you 14 Big Macs.
In China $50 will get you 16 Big Macs.
In Vietnam, $50 dollar will get you 17 Big Macs.
... almost 18, but not quite.
But, if you are really hungry, you should go to South Africa.
In South Africa, $50 dollars will get you 23 Big Macs and you will still have enough money left over for a soda.
This allows us to see a currency's purchasing power, better than a normal PPP Index.
★重点单词：Key words
Pretend: 假装
Spend： 花费
Normal: 正常
PPP Index: 购买力平价指数
★小测试：Questions
What does the Big Mac Index Compare?
Who created the Big Mac Index?
What country is the best to go to if you want to eat a lot of Big Macs?
★上期答案：Answers to “Negative Oil Prices"
The futures brokers are paying people to store the oil because they cannot sell it.
Garbage is a negative value good.
Saudi Arabia and Russia increased the supply of oil. Also, no one needs oil in America because they are not driving their cars.
集团总部总裁办 Ian Antrim