Eli5: What is Purchasing Power Parity?
In: Economics
You live in Narnia and get paid 10 gold coins to run your adventurist potion store. A magic shroom costs 2 coins. You can get 5.
You move to Hobbiton for a potion sales job that pays 1000 silver coins. Shrooms cost 200 silver here. You can still get 5.
Narnia and Hobbiton have purchasing power parity.
You then move back to Narnia but a nicer neighbourhood. You get a job that now pays 20 gold coins. Shrooms in your nice digs cost 4 gold because you import them. You can get 5 shrooms still.
Both neighbourhoods have purchasing power parity.
Edit: spelling correction and typo
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