The Big Mac Index is The Economist’s way of analyzing purchasing-power parity, a theory that states in the long run, exchange rates should adjust so goods and services cost the same everywhere.
The magazine uses McDonald’s Big Mac because it’s made with the same ingredients in almost every country where it’s sold. India’s Maharaja Mac, which contains chicken, is the exception (it’s also the cheapest Big Mac in the world).
The index shows the euro is only 2% overvalued compared with the U.S. dollar, but Big Mac prices vary widely within the Eurozone. Burgers are cheapest in Greece and Portugal, with the index showing the “Greek euro” to be 27% undervalued and the “Finnish euro” to be 16% overvalued.
Norway’s Big Macs are most expensive, which means the krone is 65% overvalued.
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To see the full index click here.