What is purchasing power parity?

PPP for a country is measured by the price a typical consumer pays for the basket of goods/services they buy compared to how much those good would cost in the US. The simplest way to look at it is the price of a big mac, since they are the same everywhere, they should cost the same everywhere in equilibrium, so economist have created the big mac index to measure the difference between exchange rates and PPP a href="http://www.economist.com/node/13055650?story_id=E1_TPDVVGVD" rel="nofollow"http://www.economist.com/node/13055650?s…/a