2007-02-22 17:04:24 · 4 answers · asked by ASAD J 1 in Social Science ➔ Economics
Purchasing Power Parity.
Purchasing power parity (PPP) theory was developed by Gustav Cassel in 1920. It is the method of using the long-run equilibrium exchange rate of two currencies to equalize the currencies' purchasing power. It is based on the law of one price, the idea that, in an efficient market, identical goods must have only one price.
2007-02-22 23:30:51 · answer #1 · answered by MSDC 4 · 0⤊ 0⤋
PPP stands for purchasing power parity. It is an adjustment made to Gross Domestic Product figures that accounts for the fact that a dollar's worth of purchasing power can buy you more in some places than others (ie rice is probably cheaper in China than it is in America, and China's GDP figures should be adjusted upward to take this into account.)
2007-02-23 01:10:08 · answer #2 · answered by Adam J 6 · 2⤊ 0⤋
Adam's answer is correct, except in that it isn't a correction solely limited to GDP. Any price or set of prices may be PPP adjusted.
2007-02-23 01:26:06 · answer #3 · answered by a_liberal_economist 3 · 0⤊ 0⤋
Point to Point Protocol
2007-02-23 01:08:06 · answer #4 · answered by RiverGirl 7 · 0⤊ 1⤋