Purchasing power parity refers to the:

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) is an economic theory that suggests that the exchange rate between two countries’ currencies should adjust so that a basket of goods and services has the same price in both countries. In other words, PPP means that the price of a market basket of goods should be the same in different countries once the exchange rate is taken into account. Therefore, the nominal exchange rate for which a market basket would cost the same in each country is the correct answer.

Purchasing Power Parity Refers to The