Big Mac Index will show a target exchange rate for the selected currencies and the percentage deviation between the current and the target exchange rate. It is based on purchasing power parity (PPP).
The story behind the Big Mac Index
The Big Mac Index is an informal way of measuring the purchasing power parity (PPP) between two currencies.
The premise of the Big Mac Index is the existence of LOP (Eng. Law of One Price): the dollar price of a burger should not vary from country to country. Commodity prices should be the same in both countries observed, and the main role of the exchange rate is to correct any disproportion.
Exchange rates obtained by purchasing power parity balances the cost of goods and services in both countries.
Price of a Big Mac in USD * Exchange rates = Price of a Big Mac in observed country.
In one sentence, the purchasing power parity is the target exchange rate for the observed currency.
Interface Columns (see attached picture)
The following are inputs available in the application:
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