Final answer:
The theory of international exchange that holds that exchange rates are set so that the price of similar goods in different countries is the same is called purchasing power parity (PPP).
Step-by-step explanation:
The theory of international exchange that holds that exchange rates are set so that the price of similar goods in different countries is the same is called purchasing power parity (PPP). PPP is based on the concept that in the long run, exchange rates should adjust to equalize the purchasing power of currencies in terms of internationally traded goods. For example, if a laptop costs $1000 in the United States and £800 in the United Kingdom, the exchange rate should adjust to ensure that the price of the laptop is the same when converted into different currencies.