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Question
Which of the following provides an idea about the exchange rate between two currencies?
Which of the following provides an idea about the exchange rate between two currencies?
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Solution
The correct option is C Purchasing power parity
Purchasing power parity can be defined as the number of units of a country’s currency required to buy the same amount of goods and services in the domestic market as one dollar would buy in the USA. Thus, it also highlights the exchange rate between these two currencies.
Purchasing power parity can be defined as the number of units of a country’s currency required to buy the same amount of goods and services in the domestic market as one dollar would buy in the USA. Thus, it also highlights the exchange rate between these two currencies.
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