Purchasing power parity

Purchasing power parity
The notion that the ratio between domestic and foreign price levels should equal the equilibrium exchange rate between domestic and foreign currencies. The New York Times Financial Glossary

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   ► See PPP.

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purchasing power parity UK US noun [U] (ABBREVIATION PPP) ECONOMICS
a measure of how much one unit of a currency would buy in different countries, calculated by comparing the price of one or more particular products in each country. Purchasing power parity is used to judge if currency exchange rates are correct in relation to what can be bought with different currencies: »

The theory of purchasing power parity says that, over time, exchange rates should equalize the prices of an identical basket of goods and services in any two countries.

Financial and business terms. 2012.

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Look at other dictionaries:

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  • purchasing power parity — PPP The theory that, after adjusting for the exchange rate, the cost of a good should be the same in all countries. In other words, the rate of exchange between two currencies should be such that each currency has exactly the same purchasing… …   Big dictionary of business and management

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  • Purchasing Power Parity - PPP — An economic theory that estimates 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. The relative version of PPP is calculated as: Where: S… …   Investment dictionary

  • purchasing power parity theory — The theory that the exchange rate between one currency and another is in equilibrium when their domestic purchasing powers at that rate of exchange are equivalent …   Accounting dictionary

  • Purchasing Power Parity — Parité de pouvoir d achat Pour les articles homonymes, voir Parité et PPA. La parité de pouvoir d achat (PPA) (on parle de valeurs mesurées en parité de pouvoir d achat) est une méthode utilisée en économie pour établir une comparaison entre pays …   Wikipédia en Français

  • purchasing power parity — noun : the ratio between the currencies of two countries at which each currency when exchanged for the other will purchase the same quantity of goods as it purchases at home excluding customs duties and costs of transport compare par …   Useful english dictionary

  • Purchasing power — is the amount of value of a good/services compared to the amount paid with a currency. Currency can be either a commodity money, like gold or silver, or fiat currency like US dollars which are the world reserve currency. As Adam Smith noted,… …   Wikipedia

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