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.

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

State and explain 5 factors which affect the foreign exchange value of the British currency.

0 Answers  

---

who prepared the preface of the Ist five year plan in India?

2 Answers   Banking,

---

What are the most important factors responsible for economic growth in Britain? real examples is required.

1 Answers   SSC,

---

What is the difference between the real investment and financial investment?

3 Answers   Karvy,

---

Who is responsible to collect the service tax?

12 Answers   Ashok Leyland, Bank of Baroda, Postal Assistant Exam, Section Engineer, SSC,

---

Basing on which inflation is checked temporarily?

4 Answers  

---

the market price is related to {A} very short period.{B}short period {C}long period{D}very long period

2 Answers   SSC,

---

Why the global financial crisis did not affect strongly on the underdeveloped countries?

2 Answers  

---

Purchasing power parity?

2 Answers  

---

What is a Barter economy?

0 Answers  

---

Who propounded the possibility of placing communication satellites in geosynchronous orbit for the first time?

1 Answers  

---

Why Governments have been unable to solve the problem of the current global crisis?

1 Answers  

---