and why is it important when compairing two countries’ Gross Domestic Product?
In: 1
Purchasing power is the value of a currency to buy actually usable stuff. If you took 1 US Dollar and buy soda in USA then you get say 1 bottle. For the same 1 US dollar in India you get say 3 bottles. So now you paid the same amount of money but got different quantities of items. PPP will adjust for this and show you the standardized value of goods.
Here GDP of USA is 1 US dollar, and say this is the baseline
Then as per PPP the GDP of India is 3 US Dollars
Latest Answers