The Big Mac Index is used to measure what economic concept?

The Big Mac Index is a tool developed by The Economist to measure purchasing power parity (PPP) between different currencies. It does this by comparing the relative price of a Big Mac burger in various countries. The underlying idea is that if the price of a Big Mac is different in two countries, then the currencies are not at parity concerning what they can purchase.

By assessing the price of a standardized product like the Big Mac, the index highlights discrepancies in exchange rates that can exist due to varying local prices. If one country's currency is undervalued or overvalued relative to another, it is reflected in the cost of the Big Mac. Therefore, the index provides an informal way to gauge whether currencies are overvalued or undervalued based on consumer goods prices, making it a classic example in economic discussions about purchasing power parity.

Other options such as inflation rates, employment statistics, and interest rates, while important economic indicators, do not relate directly to the concept of purchasing power parity, which focuses specifically on currency valuation through the lens of consumer goods.