Eli5: What is Purchasing Power Parity?
In: Economics
Comparing different money values normalized to the purchase power, I.E. how much you can actually buy with it.
For example 1 USD is roughly 56 philippinian Pesos when traded at some currency exchange.
But if you want to compare a wage in the US versus the Philippines you have to consider that in the US rent and food is much more expensive, so at Purchase Power Parity it’s closer to 18 Pesos per dollar to afford the same standard of living
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