Purchasing power parity is based on the difference in productive output (GDP) that exists between two countries.

Name: Purchasing power parity is based on the difference in productive output (GDP) that exists between two countries.
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Purchasing power parity is based on the idea that the exchange rate between two currencies should adjust to ensure that a basket of goods and services has the same price in both countries. It does not necessarily depend on the difference in productive output.

Purchasing Power Parity Is Based on the Difference in Productive