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Egypt is the Cheapest Place in the World to Buy a Big Mac – But What Does That Mean?

January 31, 2017

Craving McDonald’s? According to The Economist’s latest calculations, Egypt is currently the cheapest place on earth to buy a Bic Mac. While a single Big Mac costs $US 5 in the United States, a Big Mac in Egypt costs just $US 1.46. In other words, using a single five dollar bill, a person can buy three Big Macs in Cairo and still have 62 cents left to spend on other goodies. Yet, what do the latest results of the Big Mac Index really mean for Egypt? According to the International Monetary Fund in 2016, Egypt needed to float the Egyptian pound as it was overvalued against foreign currencies such as the US dollar and the Euro. However, the Big Mac Index, which is described by the Economist as a “lighthearted guide to whether currencies are at their ‘correct’ level”, indicates the Egyptian pound is currently highly undervalued. The Big Index is based on the theory of purchasing-power parity, which the Economist explains is “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…


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