Chapter 8R, Problem 14MCQ

To determine

To find:

The correct statement regarding the countries engaged in purchasing power parity.

Explanation of Solution

In simple words, PPP, or purchasing power parity, is a method of measuring prices in various nations that compares the absolute purchasing power of their respective currencies and, to some extent, the level of life of their citizens. The price of the basket of products at one location divided by the price of the basket of goods at a second location is frequently how PPP generates an inflation rate. Because of tariffs and other transaction expenses, the PPP inflation and exchange rate may be different from the market exchange rate.

Thus, from the above we can conclude that the correct option is C.