PPP = Purchasing power partity
2007-03-28 02:32:55 · 2 answers · asked by ? 1 in Social Science ➔ Economics
They have nothing in common.
PPP, which is Purchasing Power Parity is just a (clever) way to measure macro economics values, including the Per Capita Income.
Read links below that are well done.
To Alex K: When I say they have nothing in common, I mean that PCI is an aggregate and PPP is a method to measure it. It is just the same link between a bottle of beer and : its price/its taste/its content.
2007-03-28 03:23:18 · answer #1 · answered by Pat le Pirate 3 · 0⤊ 0⤋
Purchasing Power Parity is a way of normalizing countries to their exchange rates in order to examine how much a dollar (or another other currency) buys you in each country.
Per-Capita income is just the total amount a country produces (in dollar terms), divided by the number of people in that country.
It seems like they would be similar, but when things are a lot cheaper in a country compared to another (3rd world vs 1st world), Per-Capita income can be deceiving. A poor country may have a lot lower Per-capita income, but their PPP may be so low due to cheaper food, etc. that they are actually not as bad off as it seems.
I'm repeating the links from the other answerer, they are good, even though he is wrong that they have nothing to do with eachother...
2007-03-28 10:43:14 · answer #2 · answered by Alex K 3 · 0⤊ 0⤋