Purchasing Power Parity

What is meant by “purchasing power parity” between two currencies?

Purchasing Power Parity means that the relative cost of a similar product should be the same in different locations (normally countries). For example, if the exchange rate between two countries is 1.5 units of currency of b to one unit of currency of a, if a product costs 3 unit of currency in the country a, it should cost 4.5 units of currency in country b.

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