New investors would surely be perplexed with what the Big Mac PPP is all about. Basically it is just a study to measure how overvalued or undervalued a certain currency is. According to Investopedia, Big Mac PPP is “a survey done by The Economist that determines what a country’s exchange rate would have to be for a Big Mac in that country to cost the same as it does in the United States. Purchase power parity (PPP) is the theory that currencies adjust according to changes in their purchasing power. With the Big Mac PPP, purchasing power is reflected by the price of a McDonald’s Big Mac in a particular country.”

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