|
|
Absolute form of purchasing power parity |
|
|
|
 Home Site Map Add Term Search About Us Contributors |
Absolute form of purchasing power parityA theory that prices of products of two different countries should be equal when measured by a common currency. Also called the "law of one price."Absolute form of purchasing power parity Similar MatchesPurchasing powerPurchasing powerThe amount of goods and services which can be purchased by a given unit of currency after taking into account the effect of inflation. Purchasing power can be assessed by tracking an index of consumer prices and comparing different periods, for example the early 1990s and the current time. Inflation will result in reduced purchasing power over a period of time. Purchasing power parity exchange ratePurchasing power parity exchange rateAn exchange rate calculated to yield absolute purchasing power parity. Useful for making comparisons of real values (wages, GDP) across countries with different currencies. Since the purchasing power parity theory is rarely correct, this contrasts with the nominal exchange rate. Purchasing power parity theoryPurchasing power parity theoryA theory of the exchange rate that the rate will adjust to achieve purchasing power parity, in either its absolute or its relative form. Relative form of purchasing power parityRelative form of purchasing power parityTheory that the rate of change in the prices of products should be somewhat similar, but not absolutely the same when measured in a common currency, as long as transportation costs and trade barriers are unchanged. Purchasing power of the dollarPurchasing power of the dollarThe amount of goods and services that can be exchanged for a dollar as compared with amount of a previous time period. Further SuggestionsPurchasing powerPurchasing power parity Purchasing power parity Purchasing power Purchasing power risk |
|
|
|