Purchasing power parity

  • purchasing power parity (ppp)[1] is a term that measures prices in different areas using a specific good/goods to contrast the absolute purchasing power between currencies. in many cases, ppp produces an inflation rate that is equal to the price of the 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 poverty, tariffs and other frictions. ppp exchange rates are widely used when comparing the gdp of different countries.[2]

  • concept
  • usage
  • issues
  • history
  • examples
  • see also
  • references
  • external links

Purchasing power parity (PPP)[1] is a term that measures prices in different areas using a specific good/goods to contrast the absolute purchasing power between currencies. In many cases, PPP produces an inflation rate that is equal to the price of the 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 poverty, tariffs and other frictions. PPP exchange rates are widely used when comparing the GDP of different countries.[2]