Question

Eileen, a manager at an international restaurant chain, wants to know if it will be most cost effective to buy 1,000 pounds of sugar in Country X or in Country Y using U.S. dollars. Which of the following isEileen most likely trying to determine?

A) purchasing power parity
B) economic growth rate
C) gross domestic income
D) gross national product

Answer 1

The correct answer is letter "A": Purchasing Power Parity.

Step-by-step explanation:

Purchasing Power Parity or PPP compares currencies of different countries through the approach of a market basket of goods. Two currencies are in PPP when, in both countries, a market basket of goods, taking into account the exchange rate, is priced the same. PPP currency rates are considered more reliable than the exchange rates on the market.