If budgets and expenses are stable over time but income from exports is unpredictable, developing governments can face unexpected surpluses or deficits. This is known as purchasing power parity.

Question

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Purchasing power parity (PPP) is an economic theory that compares different countries' currencies through a "basket of goods" approach, aiming to determine the relative value of the currencies. The scenario described relates to fiscal volatility due to unpredictable export income, not PPP.

If Budgets and Expenses Are Stable Over Time but Income