|
|
Purchasing power of the dollar |
|
|
|
 Home Site Map Add Term Search About Us Contributors |
Purchasing 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.Purchasing power of the dollar Similar MatchesPurchasing power parityPurchasing power parity1. The equality of the prices of a bundle of goods (usually the CPI) in two countries when valued at the prevailing exchange rate. Called absolute PPP. 2. The equality of the rates of change over time in the prices of a bundle of goods in two countries when valued at the prevailing exchange rate. Called relative PPP. Implies that the rate of depreciation of a currency must equal the difference between its inflation rate and the inflation rate in the currency to which it is being compared. Absolute form of purchasing power parityAbsolute 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." Purchasing powerPurchasing powerThe amount of goods that money will buy, usually measured (inversely) by the CPI. 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 parityPurchasing power parityThe notion that the ratio between domestic and foreign price levels should equal the equilibrium exchange rate between domestic and foreign currencies. Further SuggestionsPurchasing powerpurchasing power Purchasing power parity exchange rate Purchasing power parity theory Purchasing power risk |
|
|
|