PageRank is a formula that Google uses to represent how important a page is on the web. In a way, when one when you link to another page from your site, you are effectively casting a vote for the other page. The more "votes" that are cast for a page, the more important the page must be. The trust value and importance of the page that is casting the vote determines how important the vote itself is, and is used in the calculation.
The following links will explain more about Google Page Rank:
PageRank Technology: PageRank reflects our view of the importance of web pages by considering more than 500 million variables and 2 billion terms. Pages that we believe are important pages receive a higher PageRank and are more likely to appear at the top of the search results. PageRank also considers the importance of each page that casts a vote, as votes from some pages are considered to have greater value, thus giving the linked page greater value. We have always taken a pragmatic approach to help improve search quality and create useful products, and our technology uses the collective intelligence of the web to determine a page's importance.
Google Toolbar: Internet Explorer and Firefox Toolbar with Google search. Additional options include a pop-up blocker and form-filler.
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