The Big Mac Index is employed in the determination of purchasing power parity (PPP). Purchasing power parity refers to the theory that the exchange rates between two countries` currencies should equate the prices of a basket of goods and services in both countries. In other words, it aims to measure the relative value of currencies by comparing the prices of a standardized basket of goods.

The Big Mac Index was created by The Economist magazine as a simplified way to demonstrate the concept of purchasing power parity. It compares the prices of a Big Mac hamburger in different countries to determine whether a particular currency is overvalued or undervalued. If the price of a Big Mac is higher in one country compared to another, it suggests that the currency of the former is overvalued.

By using the Big Mac Index, analysts and economists can gain insights into the relative purchasing power of different currencies and make predictions about exchange rates. It serves as a useful tool for understanding international economic relationships and comparing living standards across countries.

Therefore, option 2 - Purchasing power parity, is the correct answer.