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Economics

Exchange Rates and Purchasing Power Parity

Quick fact

The Economist's Big Mac Index compares the price of a Big Mac across countries to estimate whether currencies are under- or over-valued relative to purchasing power parity.

Why this is interesting

You've likely seen that $10 can buy a hearty meal in some countries but just a coffee in others. Why does the money 'go further' in some places, and what does the exchange rate really tell us about value?