The index is based on the idea of purchasing-power parity (PPP), which says currencies should trade at the rate that makes the priceof goods the same in each country.
The Big Mac Index is based on the theory of purchasing-power parity (PPP), which says that exchange rates should move to make the priceof a basket of goods the same in each country.
It is based on the theory of purchasing-power parity (PPP), which says that exchange rates should equalise the priceof a basket of goods in each country.