Final answer:
The ratio of the purchasing power of two economies is termed the B. real exchange rate. It is the rate at which two currencies can be exchanged to purchase the same basket of goods and services in both economies.
Step-by-step explanation:
The ratio of the purchasing power of two economies is termed the real exchange rate. The real exchange rate is the rate at which two currencies can be exchanged to purchase the same basket of goods and services in both economies.
It takes into account the differences in inflation rates between the two economies. For example, if the real exchange rate between the US dollar and the euro is 1.2, it means that a basket of goods and services that costs $1 in the US would cost €1.2 in the eurozone.