The relative purchasing power of a currency is:
A) the exchange rate expressed in ounces of gold.
B) the value of one currency in terms of the goods and services a unit will purchase compared with an equivalent amount of another currency.
C) the official value of one nation's currency compared with the official value of another currency.
D) the value of the currency during an economic expansion compared with its value during a recession.

Question

Quizplus · Accepted Answer

The relative purchasing power of a currency is the value of one currency in terms of the goods and services a unit will purchase compared with an equivalent amount of another currency. This takes into account the cost of living and the price levels in each country, making it a more accurate measure of the currency's purchasing power compared to other currencies.

The Relative Purchasing Power of a Currency Is