Described as “a fun guide to whether currencies are at their ‘correct’ level”, the Economist created the Big Mac Index — yes, as in the hamburger.
The index is based on the theory of purchasing power parity (PPP), and that the price of a McDonald’s Big Mac in a particular country has a direct correlation to the value of their currency in relation to the U.S. Dollar.
Did you get all that?… Good, now explain it to me.
Original Big Mac Index here.