what does purchasing power parity mean?
In: Economics
If you take the exchange rate of two currencies into consideration, then certain commodities that are globally available will have different prices based on their location. The difference in price is called the purchasing power parity.
Look up The Economist Big Mac index. They take the price of a Big Mac across the world and compare it against the current exchange rates. Convert all of the prices to US$ and the different prices reflect how much a US$ will buy in different areas. I think of it like a cost of living difference.
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