Purchasing power parity means that the price of similar goods is the same regardless of which currency one uses to buy the goods.

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) theory states that the exchange rate between two currencies is in equilibrium when their purchasing power is the same in each of the two countries. This means that the price of similar goods should be the same regardless of which currency is used to purchase them, and therefore option A is correct.

Purchasing Power Parity Means That the Price of Similar Goods