What does purchasing power parity mean?
Definitions for purchasing power parity
pur·chas·ing pow·er par·i·ty
This dictionary definitions page includes all the possible meanings, example usage and translations of the word purchasing power parity.
Wiktionary
purchasing power paritynoun
A theory of long-term equilibrium exchange rates based on relative price levels of two countries.
Wikipedia
Purchasing power parity
Purchasing power parity (PPP) is a measurement of the price of specific goods in different countries and is used to compare the absolute purchasing power of the countries' currencies. PPP is effectively the ratio of the price of a basket of goods at one location divided by the price of the basket of goods at a different location. The PPP inflation and exchange rate may differ from the market exchange rate because of tariffs, and other transaction costs.The purchasing power parity indicator can be used to compare economies regarding their gross domestic product (GDP), labour productivity and actual individual consumption, and in some cases to analyse price convergence and to compare the cost of living between places. The calculation of the PPP, according to the OECD, is made through a basket of goods that contains a "final product list [that] covers around 3,000 consumer goods and services, 30 occupations in government, 200 types of equipment goods and about 15 construction projects".
Wikidata
Purchasing power parity
Purchasing power parity is an economic theory and a technique used to determine the relative value of currencies, estimating the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power. It asks how much money would be needed to purchase the same goods and services in two countries, and uses that to calculate an implicit foreign exchange rate. Using that PPP rate, an amount of money thus has the same purchasing power in different countries. Among other uses, PPP rates facilitate international comparisons of income, as market exchange rates are often volatile, are affected by political and financial factors that do not lead to immediate changes in income and tend to systematically understate the standard of living in poor countries, due to the Balassa–Samuelson effect. The idea originated with the School of Salamanca in the 16th century and was developed in its modern form by Gustav Cassel in 1918. The concept is based on the law of one price, where in the absence of transaction costs and official trade barriers, identical goods will have the same price in different markets when the prices are expressed in the same currency.
Numerology
Chaldean Numerology
The numerical value of purchasing power parity in Chaldean Numerology is: 1
Pythagorean Numerology
The numerical value of purchasing power parity in Pythagorean Numerology is: 3
Translations for purchasing power parity
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"purchasing power parity." Definitions.net. STANDS4 LLC, 2024. Web. 2 May 2024. <https://www.definitions.net/definition/purchasing+power+parity>.
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