#COST OF A BIG MAC IN AMERICAN CITIES MAC#
The Big Mac index has become a global standard, included in several economic textbooks and the subject of at least 20 academic studies. Therefore, the "raw" Big Mac index says that the yuan was undervalued by 45% at that time. For example, the average price of a Big Mac in America in July 2016 was $5.04 in China it was only $2.79 at market exchange rates. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries. The Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. Russian ruble is undervalued by 59.3% against the dollar and 51.3% against the euro. Russia, South Africa, and Malaysia are among the countries with the most undervalued local currency (over 50%). Below are the 10 most expensive cities in the world based on its Cost of living index calculated by Economist. Cost of living is the amount of money needed to maintain a certain standard of living by affording basic expenses such as housing, food, taxes, and health care. As for the euro, its real value is 10.21 hryvnia at the current rate 27.3 UAH / EUR. The Cost of living is the index used to calculate how expensive is it to live in one city/country compared with another. The Big Mac Index suggests that the dollar in Ukraine is to be worth UAH 7.74 instead of the current rate of 24.8 hryvnia/dollar. To be precise, hryvnia is undervalued by 68.8% against the dollar and by 62.6% against the euro. According to the Big Mac index, Ukrainian hryvnia has once again topped the list of the most undervalued world currencies against the dollar.
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