Big Mac Index
Published by
The Economist, this indicator measures purchasing power parity (PPP) between economies and is a guide as to whether currencies are at their “correct” level. PPP says where exchanges rates should move in the long run . It looks at the price of a Big Mac burger, which is available in 100 different countries. In the July 2011 index, a Big Mac in the U.S. cost $4.07, whereas in China it cost $2.27. This suggests the Chinese Yuan is 44 percent undervalued versus the U.S. dollar; otherwise the price of the Big Mac would be the same. (Do you want fries with that?)
