PPP Flashcards
1
Q
what is the acronym for purchasing power parity
A
PPP
2
Q
what is purchasing power parity
A
the relative costs of goods and services in different countries. - involves looking at a basket of goods to determine effective living costs
3
Q
why is the purchasing power parity needed
A
we need a way to compare the volume or real GDP using an exchange rate that reflects the same purchasing power
4
Q
what is the Big Mac index
A
measures currency against standard product
5
Q
why is the Big Mac used as the product
A
it is universally available and a standardized product
6
Q
what currency is used for the Big Mac index
A
the US dollar
