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English definition of “purchasing power parity”

purchasing power parity

noun [U]     ( abbreviation PPP) ECONOMICS
a measure of how much one unit of a currency would buy in different countries, calculated by comparing the price of one or more particular products in each country. Purchasing power parity is used to judge if currency exchange rates are correct in relation to what can be bought with different currencies: The theory of purchasing power parity says that, over time, exchange rates should equalize the prices of an identical basket of goods and services in any two countries.
(Definition of purchasing power parity noun from the Cambridge Business English Dictionary © Cambridge University Press)
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