Purchasing power parity is the theory that,in the long run,exchange rates should be at a level such that equivalent amounts of any country's currency

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Purchasing power parity suggests that in the long run, exchange rates should be such that equivalent amounts of any country's currency can buy the same amount of goods and services. This means that if the exchange rate is not in line with purchasing power parity, then goods and services could be cheaper in one country compared to the other, leading to arbitrage opportunities. Therefore, the goal of achieving purchasing power parity helps to prevent such opportunities and ensures that one can buy the same amount of goods and services with equivalent amounts of any country's currency.

Purchasing Power Parity Is the Theory That,in the Long Run,exchange