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Big Mac Index

The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries. The index messures what a country's exchange rate would have to be for a Big Mac in that country to cost the same as it does in the United States. Purchasing power is in this index reflected by the cost of buying a McDonald's Big Mac in a particular country. The calculation of the Big Mac PPP-adjusted exchange rate looks at the price of a Big Mac in a given country and divides it by the price of a U.S. Big Mac.

 

 

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