Question

How does the Big Mac Index and the topic of purchasing power relate to the overall outlook on the economy? Do you think economic indicators are helpful and useful?

Answer 1

Big Mac index is based on the theory of purchasing power parity that how much the prices are being paid by different consumers for a purchase of a similar item in different countries.

this similar item in this case is supposed to be Big Mac which is priced differently in different nations, so that this index is used to determine the purchasing power of big Mac in different countries and it is known as big Mac index.

Economic indicators are always useful, because they will be always indicating various trends into the economy in advance in order to predict the changes in the economic cycle so it would be very important in order to look into various kinds of economic indicators in order to find out the recent changes in the economy and it also means that the changes in demand and supply patterns as well as the changes in the disposable income patterns of customer can be easily predicted by these economic indicators.