Purchasing power parity?
Answers were Sorted based on User's Feedback
Answer / khushal
Purchasing Power Parity PPP is a theory which suggests that
exchange rates are in equilibrium when they have the same
purchasing power in different countries.
A very simple example.
Suppose a Big Mac costs £2 in the UK and $4 in the US. The
correct exchange rate according to purchasing power parity
would by £1 in $2. This would leave a customer indifferent
to buying the good in the UK and buying it in the US.
Suppose an Apple Mac costs £1,000 in the UK and $1000 in the
US. An exchange rate of £1 to $2 suggests that it is much
cheaper to buy the Mac in America. Therefore, UK citizens
will want to import the good from America, this will involve
selling pounds and buying dollars causing the Pound to
depreciate.
Is This Answer Correct ? | 0 Yes | 0 No |
Answer / vijay kumar venna
Purchasing power parity (PPP) is a theory of long-term
equilibrium exchange rates based on relative price levels of
two countries.
for more information click on the link below....
http://en.wikipedia.org/wiki/Purchasing_power_parity
Is This Answer Correct ? | 0 Yes | 1 No |
Who is responsible to collect the service tax?
12 Answers Ashok Leyland, Bank of Baroda, Postal Assistant Exam, Section Engineer, SSC,
what is the difference between repo rate and bank or discount rate ? and as discount rate are determined by central bank is repo rate is determined by MPC monitary policy comittee?
i have IOB po interview on 19-06-2009. pls send me the questions that area asked in the interview if anybody attended the interview prior to 19 june 2009. my mail id is: venkatesan.now@gmail.com,please help me
who prepared the preface of the Ist five year plan in India?
What is the major aim of devaluation?
Which of the following taxes is the largest source of revenue for the Government of India?
who is the first President of RBI
Which cricket player is the max tax payer in year 2009-10
how many members can be created inside a single pds?
State and explain 5 factors which affect the foreign exchange value of the British currency.
What are the most important factors responsible for economic growth in Britain? real examples is required.
Purchasing power parity?