Measuring Global Currency With Burgers

You can test if a currency is overvalued by comparing the price of a McDonald's Big Mac worldwide. This lighthearted index reveals if exchange rates truly reflect the local cost of living.

Since 1986, economists have used this burger as a global benchmark to gauge purchasing power parity. If a Big Mac costs much less in one country than another, it suggests the local currency is undervalued compared to the dollar. While it is not a perfect scientific tool, it makes complex exchange-rate theory much easier to swallow. It has become a surprisingly popular way to track how money actually behaves across international borders.