Global Economics

The Economist magazine has observed that the price of Big Macs is systematically positively related to a country’s income level, just as is the general price level. Now go to The Economist’s Big Mac standard website, at http://www.economist.com/content/big-mac-index, and download the Excel spreadsheet containing the data on under/overvaluation of currencies. Furthermore, go to the World Bank’s World Development Indicators website, http://data.worldbank.org/indicator/, and find the most recent data on GNI (Gross National Income) per capita, PPP, for all countries. 

Now:

  • Use these data, together with The Economist data on Big Mac dollar prices, to make a graph of income per capita (horizontal axis) versus dollar Big Mac price (vertical axis). 
  • What do you find? (select only 20 countries and the date 2018)
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