purchasing power parity or ppp says the ratios composed of:
The purchasing power parity (PPP) principle stipulates that all countries should have the same ratios after translating prices to a common currency and considering the exchange rate.
Currency valuations should converge over time, meaning customers in different nations pay the same price for equivalent products and services, according to the PPP hypothesis. A country's exchange rate should be adjusted so that two countries' baskets of products and services, each priced in its own currency, cost 100 units of currency when converted to a common currency.
PPP is used to compare nations' GDP and quality of life. PPP compares consumers' buying power across nations by factoring in product and service costs. This statistic calculates the real exchange rate, which impacts business and finance.
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