Big Mac PPP

You might think it's an overweight rapper whose real is Philip Peter Prescott. You might also think we're kidding when we say it's really an economic indicator using McDonald's Big Macs as a way of examining relative currency values around the world. You'd be wrong on both counts.

The Big Mac PPP (the three p's standing for "purchasing power parity") helps measure currency valuations. Put together by The Economist, the underlying premise is that the Big Mac's construction stays consistent everywhere it’s served. Meanwhile, its pricing has to be sensitive to the local economy. Therefore, it can be used as a stand-in for consumer purchasing power.

By comparing Big Mac prices in various currencies, and then comparing the market value of those currencies relative to each other, the Big Mac PPP tracks which currencies are overvalued and which are undervalued on the forex market.