The Big Mac Index Hota Kya Hai? 🍔

Have you ever wondered what the cost of an item you consume in India 🇮🇳 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$ approx. in the US, which is equivalent to INR. 400. However, the cost of the same burger in India is just INR. 250. Do the math and you get 1$ coming to just INR 50 INR compared to the INR 80 exchange rate. This is because the Big mac is cheaper to produce in India. The cost of rent, salaries etc., are much more affordable in India 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 2 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 India is 1$ = INR 22. ✅ 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. #financewithsharan #bigmacindex #economics #moneytalks #moneymotivated