purchasing power parity

Syllable breakdown

Dictionary meaning

an economic theory and measurement tool that adjusts exchange rates between countries so that a common basket of goods and services costs the same in each country, enabling meaningful comparisons of real economic output and living standards across different economies; PPP adjustments reveal that nominal exchange rates often overstate the economic gap between rich and developing nations, because goods and services are substantially cheaper in lower-income countries; institutions such as the World Bank and IMF use PPP-adjusted figures to compare GDP and income levels internationally