To determine this cost, The Economist takes the average cost of the Big Mac in New York, San Francisco, Chicago and Atlanta each year. The following table lists the cost of a Big Mac in the United States from 1986 through 2011. While we are not concerned here with exchange rates, we can borrow their Big Mac prices. The well respected magazine, The Economist, began using the price of the Big Mac in 1986 to create the Big Mac Index, a lighthearted, but serious way to compare exchange rates between world currencies to determine which are overvalued or undervalued. Yes, even the skyrocketing price of oil affects the price of a Big Mac since diesel fuel must be used to transport food products to McDonald’s restaurants. As these costs increase because of growing demand around the world, the price of a Big Mac has to go up. If you think about it, the price of a Big Mac represents a wide variety of inflation factors all on a sesame seed bun - from the cost of food commodities (such as beef and wheat) to the price of oil. But since it is always on the McDonald’s menu here and around the world, it is a useful measure of inflation that everyone can relate to. Okay, let me begin by saying that a Big Mac is not the greatest nutrition choice (540 calories, 29 grams of fat, 1040 mg.
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