Absolutely purchasing power parity means:

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) is an economic theory that compares different countries' currencies through a "basket of goods" approach. According to PPP, in the absence of transaction costs and other barriers, the purchasing power of different currencies is equalized for a given basket of goods. This means that the quantity of goods that can be bought should be the same in both countries when adjusted for the exchange rate (A), making buying and selling goods equally attractive across countries (B), and the nominal exchange rate should reflect the ratio of prices between the countries (C). Therefore, all the given statements (A, B, and C) are aspects of the purchasing power parity concept, making D the correct answer.

Absolutely Purchasing Power Parity Means