Purchasing Power Parity (PPP) is an economic theory that states the exchange rate between two currencies should equalize the purchasing power of the two currencies. This means that the cost of a basket of goods and services should be the same in both countries when expressed in the same currency, after accounting for the exchange rate. PPP is an important concept in the context of foreign exchange rates and exchange rate risk.
congrats on reading the definition of Purchasing Power Parity. now let's actually learn it.