# Purchasing Power Parity (PPP)

*Macro & Economy — Finicade finance glossary*

The idea that exchange rates should drift toward levels where a basket of goods costs the same everywhere — the theory behind the Big Mac index. It anchors long-run currency values, if not day-to-day ones.

**Also known as:** ppp

**Related terms:** [Exchange Rate](https://finicade.com/glossary/exchange-rate), [Inflation](https://finicade.com/glossary/inflation), [Interest Rate Parity](https://finicade.com/glossary/interest-rate-parity)

**Taught in:** Macro & Markets — The Facts of Growth

Source: https://finicade.com/glossary/purchasing-power-parity