A conversion that determines the equivalent amount of goods and services that different currencies can buy is known as _____.
A) purchasing power parity
B) foreign exchange rate
C) country's deficit
D) gross domestic product

Question

A conversion that determines the equivalent amount of goods and services that different currencies can buy is known as _____.
A) purchasing power parity 
B) foreign exchange rate 
C) country's deficit 
D) gross domestic product

Quizplus · Accepted Answer

Purchasing power parity (PPP) is a measure of the equivalent amount of goods and services that different currencies can buy. It takes into account the exchange rate as well as the relative prices of comparable goods and services in different countries. PPP is useful for comparing living standards and income levels across countries. Foreign exchange rate (B) is the rate at which one currency can be exchanged for another. A country’s deficit (C) refers to the amount by which its spending exceeds its revenue in a given period. Gross Domestic Product (D) is the total value of goods and services produced within a country’s borders in a given period.

A Conversion That Determines the Equivalent Amount of Goods and Services