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What is the purchasing power parity?

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Question added by Vinod Jetley , Assistant General Manager , State Bank of India
Date Posted: 2015/10/03
Vinod Jetley
by Vinod Jetley , Assistant General Manager , State Bank of India

purchasing power parity

The theory that, in the long run, identical products and services in different countries should cost the same in different countries. This is based on the belief that exchange rates will adjust to eliminate the arbitrage opportunity of buying a product or service in one country and selling it in another. For example, consider a laptop computer that costs1,500 Euros in Germany and an exchange...

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