and why is it important when compairing two countries’ Gross Domestic Product?
In: 1
It’s the difference between how much you can buy in two different places with the same amount of money.
In 2019, you could buy a Big Mac for $5 in the US, but in Hong Kong a Big Mac cost $20. In that interaction, Hong Kong had quadruple the GDP of the US, but they had the exact same production and consumption.
PPP measures that difference, and helps us adjust GDP to better represent how much an economy is doing.
Latest Answers