Question

The relative ability of two countries' currencies to buy the same basket of goods in those two countries is called ________. gross national product gross domestic product purchasing power choice purchasing power parity

Answer 1

The answer is Purchasing Power Parity. In addition, to correct for the incapability to associate purchasing power through countries, it turns to another measure of economic development named purchasing power parity. Conferring to this concept, two currencies are in equilibrium or at par when a market basket of goods in which captivating into account the exchange rate is valued the similar in both countries.