PPP
PPPs are the rates of currency conversion that equalize the purchasing power of different currencies by eliminating the differences in price levels between countries. In their simplest form, PPPs are simply price relatives that show the ratio of the prices in national currencies of the same good or service in different countries. All countries’ currencies don’t have the same purchasing power. When you use exchange rate for conversion of currencies you don’t consider their purchasing power. For example: if this (1 USD = 68 INR) conversion says 1 $ product in US needs 68 Indian rupees. In reality, it may or may not be true and it depends on the product as well. There are several measures to calculate PPPs between countries. One such is Big mac index, popularized by The economist. Big mac index: It compares the price of McDonald’s Big Mac burger across several countries. The Big Mac Index is presumably useful because although it is based on a single consumer product that...