"A Big Mac currently costs $3.10 in the US, and £1.94 in the UK. At the present $/£ exchange rate of 1.88, that implies that an American in London would think that his Big Mac over here costs rather a lot at $3.65. So he might say to himself: things are pretty expensive in the UK, compared with back home. But if the $/£ exchange rate were only 1.60, then the Big Mac in London would cost only the equivalent of $3.10, exactly the same as it costs in America. This implies that on the Big Mac standard, the "fair value" of the $/£ exchange rate is 1.60 - the rate that makes the Big Mac cost the same in the UK as in the US. At the current 1.88 exchange rate, the Big Mac in London is 18% more expensive than in the US, so sterling is 18% overvalued against the dollar."
If you can follow this, you may have a future as an economist (or as a hamburger flipper).
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