The purchasing power of a currency is expressed using a basket of goods and services that can be bought with a given amount in the home country. International comparison of, for example, gross domestic products (GDPs) of countries can be based on the purchasing power of currencies rather than on current exchange rates. PPP estimates tend to lower the gap between the per capita GDP in industrialized and developing countries. See also Market exchange rate (MER).
PURCHASING POWER PARITY (PPP)
