Economists can compare economic productivity and living standards across nations thanks to purchasing power parity (PPP).
The worth of a currency is determined by how many goods or services one unit of that currency can be used to purchase. Inflation may cause it to deteriorate over time. This is due to the fact that you may acquire fewer items or services as a result of increased pricing.
PPPs are merely price relations that display the comparison between the national currency pricing of the same commodity or service in several nations. PPPs are calculated for product categories as well as for all aggregate levels up to and including GDP.
PPP can be used to estimate how much more or less expensive living abroad might be.
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