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Purchasing power parity exchange rate |
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Purchasing 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.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. Purchasing power riskPurchasing power riskRelated: Inflation risk 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. Purchasing powerPurchasing powerThe amount of credit available for credit trading in a credit, after taking credit into consideration. 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." Further SuggestionsPurchasing powerpurchasing power Purchasing power parity Purchasing power of the dollar Relative form of purchasing power parity |
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