Purchasing power parity

In economics, purchasing power parity (PPP) is a method used to calculate an alternative exchange rate between the currencies of two countries. The PPP measures how much a currency can buy in terms of an international measure (usually dollars), since goods and services have different prices in some countries than in others.

Examples

West and Central African Franc

During 2003 the US Dollar bought on average about 550 CFA franc. Because of a difference in the perceived "purchasing power parity" within some of the regions using the CFA franc, their purchasing power parity exchange rate differed like this (lower is stronger parity): Cameroon 240, Central African Republic 166, Chad 172, Republic of the Congo 677, Equatorial Guinea 114, Gabon 413, Benin 273, Burkina Faso 167.

Related Topics:
CFA franc

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

GDP of China

The CIA uses the purchase power parity method in its calculations of Gross National Product http://www.cia.gov/cia/publications/factbook/fields/2001.html. By this measure the People's Republic of China has the second largest economy in the world, at $7.262 trillion (2004 est.) (CIA methodology for PPP).

Related Topics:
Gross National Product - People's Republic of China

~ ~ ~ ~ ~ ~ ~ ~ ~ ~