Back to Glossary
General TradingB
Big Mac Index
The Big Mac Index is an informal measure of purchasing power parity (PPP) published by The Economist magazine since 1986. It compares the price of a McDonald's Big Mac hamburger across different countries to assess whether currencies are overvalued or undervalued relative to the US dollar. While not a precise economic tool, it provides an accessible way to understand exchange rate theory and is widely referenced in economics education.
Example
“According to the Big Mac Index, the Swiss franc appeared overvalued because a Big Mac in Switzerland cost the equivalent of $7.50 compared to $5.50 in the US.”