Purchasing Power Parity

Purchasing power parity is a concept that measures the amount of purchasing power that two countries have about one another. It is essential because it allows us to compare the prices of goods and services in different countries.

PPP is an essential concept in economics because it helps explain why some countries have lower prices than others.

The term “purchasing power parity” was coined by William Stanley Jevons in 1865. The idea was initially developed to explain the relationship between prices and incomes, but Jevons’s theory has since been extended to other areas such as international trade and capital flows.