The idea that the exchange rate adjusts to keep buying power constant among currencies is called:

Question

Quizplus · Accepted Answer

The concept of purchasing power parity (PPP) suggests that the prices of goods and services should be equal in different countries when adjusted for the exchange rate. In other words, the exchange rate between two countries should be such that it reflects the purchasing power of each currency, and keeps the buying power constant across borders.

The Idea That the Exchange Rate Adjusts to Keep Buying