The idea that the amount of any currency that can buy a particular good in one country should be able to buy (after being exchanged for the local currency) the same quantity of the same good anywhere in the world is called:
A) the theory of the real exchange rate.
B) equal currency conversion.
C) international monetary exchange.
D) purchasing-power parity.

Question

Quizplus · Accepted Answer

The concept described is purchasing-power parity, or PPP. It suggests that exchange rates should adjust such that the same basket of goods costs the same in each country.

The Idea That the Amount of Any Currency That Can