If the exchange rate from US dollars to Euros is $1= £0.92 which currency has more purchasing power?
In: Economics
Depends on cost of good relative to exchange rate. Prices aren’t static across countries/currencies. If a Coke is $2 and also £2, then the dollar denominated Coke is cheaper. If the Coke in England is only £1.80 then it would be cheaper.
And just looking at 2 numbers static in time tells nothing about relative purchasing power. If the exchange rate was $1= £0.92 and shifted to $1 $1= £1, then the dollar would have gained purchasing power relative to the pound as it strengthened. But the base rate in and of itself tells us nothing.
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