Purchasing power parity

From CNM Wiki
Revision as of 18:27, 2 June 2020 by Kevmwangi (talk | contribs)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
Jump to: navigation, search

Purchasing power parity is a concept that implies that the level of exchange rates adjusts so that identical goods cost the same in different countries. Sometimes referred to as the “law of one price.”


Definitions

According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),

Purchasing power parity. Implies that the level of exchange rates adjusts so that identical goods cost the same in different countries. Sometimes referred to as the “law of one price.”

According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),

Purchasing power parity (PPP). The relationship in which the same products cost roughly the same amount in different countries after taking into account the exchange rate.

According to Principles of Economics by Timothy Taylor (3rd edition),

Purchasing power parity (PPP). The exchange rate that equalizes the prices of internationally traded goods across countries.

Related concepts

Related lectures