The purchasing power parity for different countries is adjusted (up or down)depending upon whether the cost of living is lower or higher than in the United States.

Question

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Purchasing power parity takes into account the cost of living in different countries and adjusts the exchange rate accordingly. If the cost of living is lower in a country compared to the United States, the exchange rate is adjusted upwards to reflect the greater purchasing power of the local currency. Similarly, if the cost of living is higher in a country compared to the United States, the exchange rate is adjusted downwards to reflect the lower purchasing power of the local currency.

The Purchasing Power Parity for Different Countries Is Adjusted (Up