Which of the following is accurate regarding purchasing power parity?
A) It gives us a better idea of what people can actually buy with the financial resources they have.
B) It reflects the principle that exchange rates are set so that prices of similar products in different countries are unequal.
C) It does not really give a good sense of the standards of living around the world.
D) It reflects the principle that capitalism is a better system than communism.
E) None of these statements are accurate.

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) is a measure that helps understand the relative value of currencies. It takes into account the prices of goods and services in different countries and adjusts them according to exchange rates to determine the true value of a currency. The main advantage of PPP is that it enables us to compare the standard of living of people in different countries by accounting for the cost of living. Therefore, the statement that PPP gives us a better idea of what people can actually buy with the financial resources they have is accurate.

Which of the Following Is Accurate Regarding Purchasing Power Parity