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Purchasing power parity

Index Purchasing power parity

Purchasing power parity (PPP) is a neoclassical economic theory that states that the exchange rate between two countries is equal to the ratio of the currencies' respective purchasing power. [1]

72 relations: Balassa–Samuelson effect, Big Mac, Big Mac Index, Capital asset, Central bank, Commodity, Commonwealth Securities, Consumption (economics), Cost, Cost accounting, Denmark, Developed country, Diamond, Economics, Ethiopia, Euro, Exchange rate, Factors of production, Foreign exchange market, Gasoline, GDP deflator, Geary–Khamis dollar, Gross domestic product, Gustav Cassel, Hedge (finance), Household final consumption expenditure, India, Inflation, Interest rate, International Comparison Program, KFC, KFC Index, Law of one price, Least Developed Countries, List of countries by GDP (nominal) per capita, List of countries by GDP (PPP), List of countries by GDP (PPP) per capita, List of countries by past and projected GDP (nominal), List of countries by past and projected GDP (PPP) per capita, List of IMF ranked countries by GDP, Market basket, Market power, Market research, McDonald's, Measures of national income and output, Mexican peso, Neoclassical economics, Observational error, OECD, Penn effect, ..., Penn World Table, Perfect competition, Poverty threshold, Price index, Price level, Product differentiation, Purchasing power, Real gross domestic product, Relative purchasing power parity, Renminbi, School of Salamanca, Speculation, Substitute good, Switzerland, The Economist, Tradability, Trade barrier, Transaction cost, United States, United States dollar, Vada pav, World Bank. Expand index (22 more) »

Balassa–Samuelson effect

The Balassa–Samuelson effect, also known as Harrod–Balassa–Samuelson effect (Kravis and Lipsey 1983), the Ricardo–Viner–Harrod–Balassa–Samuelson–Penn–Bhagwati effect (Samuelson 1994, p. 201), or productivity biased purchasing power parity (PPP) (Officer 1976) is the tendency for consumer prices to be systematically higher in more developed countries than in less developed countries.

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Big Mac

The Big Mac is a hamburger sold by international fast food restaurant chain McDonald's.

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Big Mac Index

The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries.

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Capital asset

A capital asset is defined to include property of any kind held by an assessee, whether connected with their business or profession or not connected with their business or profession.

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Central bank

A central bank, reserve bank, or monetary authority is an institution that manages a state's currency, money supply, and interest rates.

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Commodity

In economics, a commodity is an economic good or service that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.

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Commonwealth Securities

Commonwealth Securities, also known as CommSec, is Australia's largest online stockbroking firm operated by the Commonwealth Bank of Australia.

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Consumption (economics)

Consumption is the process in which consumers (customers or buyers) purchase items on the market.

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Cost

In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore.

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Cost accounting

Cost accounting is the process of recording, classifying, analyzing, summarizing, and allocating costs associated with a process, and then developing various courses of action to control the costs.

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Denmark

Denmark (Danmark), officially the Kingdom of Denmark,Kongeriget Danmark,.

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Developed country

A developed country, industrialized country, more developed country, or "more economically developed country" (MEDC), is a sovereign state that has a highly developed economy and advanced technological infrastructure relative to other less industrialized nations.

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Diamond

Diamond is a solid form of carbon with a diamond cubic crystal structure.

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Economics

Economics is the social science that studies the production, distribution, and consumption of goods and services.

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Ethiopia

Ethiopia (ኢትዮጵያ), officially the Federal Democratic Republic of Ethiopia (የኢትዮጵያ ፌዴራላዊ ዲሞክራሲያዊ ሪፐብሊክ, yeʾĪtiyoṗṗya Fēdēralawī Dēmokirasīyawī Rīpebilīk), is a country located in the Horn of Africa.

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Euro

The euro (sign: €; code: EUR) is the official currency of the European Union.

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Exchange rate

In finance, an exchange rate is the rate at which one currency will be exchanged for another.

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Factors of production

In economics, factors of production, resources, or inputs are which is used in the production process to produce output—that is, finished goods and services.

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Foreign exchange market

The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies.

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Gasoline

Gasoline (American English), or petrol (British English), is a transparent, petroleum-derived liquid that is used primarily as a fuel in spark-ignited internal combustion engines.

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GDP deflator

In economics, the GDP deflator (implicit price deflator) is a measure of the level of prices of all new, domestically produced, final goods and services in an economy.

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Geary–Khamis dollar

The Geary–Khamis dollar, more commonly known as the international dollar (Int'l. dollar or Intl. dollar, abbreviation: Int'l$., Intl$. or Int$), is a hypothetical unit of currency that has the same purchasing power parity that the U.S. dollar had in the United States at a given point in time.

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Gross domestic product

Gross domestic product (GDP) is a monetary measure of the market value of all final goods and services produced in a period (quarterly or yearly) of time.

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Gustav Cassel

Karl Gustav Cassel (20 October 1866 – 14 January 1945) was a Swedish economist and professor of economics at Stockholm University.

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Hedge (finance)

A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment.

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Household final consumption expenditure

Household final consumption expenditure (HFCE) is a transaction of the national account's use of income account representing consumer spending.

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India

India (IAST), also called the Republic of India (IAST), is a country in South Asia.

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Inflation

In economics, inflation is a sustained increase in price level of goods and services in an economy over a period of time.

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Interest rate

An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed (called the principal sum).

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International Comparison Program

The International Comparison Program, (shortened ICP) is a partnership of various statistical administrations of up to 199 countries guided by the World Bank.

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KFC

KFC, until 1991 known as Kentucky Fried Chicken, is an American fast food restaurant chain that specializes in fried chicken.

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KFC Index

The KFC Index is an informal guide to measure purchasing power parity comparing exchange rates in African countries.

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Law of one price

"The law of one price (LOOP) states that in the absence of trade frictions (such as transport costs and tariffs), and under conditions of free competition and price flexibility (where no individual sellers or buyers have power to manipulate prices and prices can freely adjust), identical goods sold in different locations must sell for the same price when prices are expressed in a common currency.

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Least Developed Countries

The Least Developed Countries (LDCs) is a list of developing countries that, according to the United Nations, exhibit the lowest indicators of socioeconomic development, with the lowest Human Development Index ratings of all countries in the world.

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List of countries by GDP (nominal) per capita

The world sorted by their gross domestic product per capita at nominal values.

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List of countries by GDP (PPP)

This article includes a list of countries by their forecasted estimated gross domestic product based on purchasing power parity, abbreviated GDP (PPP).

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List of countries by GDP (PPP) per capita

Three lists of countries below calculate gross domestic product (at purchasing power parity) per capita, i.e., the purchasing power parity (PPP) value of all final goods and services produced within a country in a given year, divided by the average (or mid-year) population for the same year.

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List of countries by past and projected GDP (nominal)

This is an alphabetical list of countries by past and projected gross domestic product (nominal) as ranked by the IMF.

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List of countries by past and projected GDP (PPP) per capita

This is an alphabetical list of countries by past and future Gross Domestic Product per capita, based on the Purchasing Power Parity (PPP) methodology, not on official exchange rates.

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List of IMF ranked countries by GDP

This is an alphabetical list of countries by GDP published by IMF.

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Market basket

A market basket or commodity bundle is a fixed list of items, in given proportions, used specifically to track the progress of inflation in an economy or specific market.

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Market power

In economics and particularly in industrial organization, market power is the ability of a firm to profitably raise the market price of a good or service over marginal cost.

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Market research

Market research (also in some contexts known as industrial research) is any organized effort to gather information about target markets or customers.

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McDonald's

McDonald's is an American fast food company, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States.

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Measures of national income and output

A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product (GDP), gross national product (GNP), net national income (NNI), and adjusted national income also called as NNI at factor cost (NNI* adjusted for natural resource depletion).

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Mexican peso

The Mexican peso (sign: $; code: MXN) is the currency of Mexico.

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Neoclassical economics

Neoclassical economics is an approach to economics focusing on the determination of goods, outputs, and income distributions in markets through supply and demand.

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Observational error

Observational error (or measurement error) is the difference between a measured value of a quantity and its true value.

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OECD

The Organisation for Economic Co-operation and Development (OECD; Organisation de coopération et de développement économiques, OCDE) is an intergovernmental economic organisation with 35 member countries, founded in 1961 to stimulate economic progress and world trade.

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Penn effect

The Penn effect is the economic finding that real income ratios between high and low income countries are systematically exaggerated by gross domestic product (GDP) conversion at market exchange rates.

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Penn World Table

The Penn World Table (PWT) is a set of national-accounts data developed and maintained by scholars at the University of California, Davis and the of the University of Groningen to measure real GDP across countries and over time.

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Perfect competition

In economics, specifically general equilibrium theory, a perfect market is defined by several idealizing conditions, collectively called perfect competition.

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Poverty threshold

The poverty threshold, poverty limit or poverty line is the minimum level of income deemed adequate in a particular country.

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Price index

A price index (plural: “price indices” or “price indexes”) is a normalized average (typically a weighted average) of price relatives for a given class of goods or services in a given region, during a given interval of time.

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Price level

The general price level is a hypothetical daily measure of overall prices for some set of goods and services (the consumer basket), in an economy or monetary union during a given interval (generally one day), normalized relative to some base set.

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Product differentiation

In economics and marketing, product differentiation (or simply differentiation) is the process of distinguishing a product or service from others, to make it more attractive to a particular target market.

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Purchasing power

Purchasing power (sometimes retroactively called adjusted for inflation) is the number and quality or value of goods and services that can be purchased with a unit of currency.

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Real gross domestic product

Real Gross Domestic Product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes (i.e., inflation or deflation).

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Relative purchasing power parity

Relative purchasing power parity is an economic theory which predicts a relationship between the inflation rates of two countries over a specified period and the movement in the exchange rate between their two currencies over the same period.

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Renminbi

The renminbi (Ab.: RMB;; sign: 元; code: CNY) is the official currency of the People's Republic of China.

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School of Salamanca

The School of Salamanca (Escuela de Salamanca) is the Renaissance of thought in diverse intellectual areas by Spanish and Portuguese theologians, rooted in the intellectual and pedagogical work of Francisco de Vitoria.

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Speculation

Speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more valuable at a future date.

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Substitute good

A substitute good is one good that can be used instead of another.

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Switzerland

Switzerland, officially the Swiss Confederation, is a sovereign state in Europe.

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The Economist

The Economist is an English-language weekly magazine-format newspaper owned by the Economist Group and edited at offices in London.

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Tradability

Tradability is the property of a good or service that can be sold in another location distant from where it was produced.

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Trade barrier

Trade barriers are government-induced restrictions on international trade.

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Transaction cost

In economics and related disciplines, a transaction cost is a cost in making any economic trade when participating in a market.

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United States

The United States of America (USA), commonly known as the United States (U.S.) or America, is a federal republic composed of 50 states, a federal district, five major self-governing territories, and various possessions.

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United States dollar

The United States dollar (sign: $; code: USD; also abbreviated US$ and referred to as the dollar, U.S. dollar, or American dollar) is the official currency of the United States and its insular territories per the United States Constitution since 1792.

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Vada pav

Vada Pav, alternatively spelt Vada Pao, Wada Pav, or Wada Pao, is a vegetarian fast food dish native to the Indian state of Maharashtra.

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World Bank

The World Bank (Banque mondiale) is an international financial institution that provides loans to countries of the world for capital projects.

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Absolute Purchasing power parity, Cost of living parity, Discussion and clarification of PPP, GDP PPP, GDP adjusted to cost of living, GDP at purchasing power parity, PPP$, Purchasing Power Parity, Purchasing Power Standard, Purchasing parity power, Purchasing power adjustment, Purchasing power parity (PPP), Purchasing price parity, Purchasing-power parity.

References

[1] https://en.wikipedia.org/wiki/Purchasing_power_parity

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