Purchasing power parity can be used 1 To compare the income levels in different 2 nbs...........

Economic Affairs Balance of Payments

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Purchasing power parity can be used-

1) To compare the income levels in different.

2) To determine exchange rates.

3) To measure Human Development Index.

Select the correct statement/s using codes given below.

1 and 2

2 only

1, 2 and 3

3 only

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Explanation:

All of the above are correct.
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

The theory aims to determine the adjustments needed to be made in the exchange rates of two currencies to make them at par with the purchasing power of each other. In other words, the expenditure on a similar commodity must be same in both currencies when accounted for exchange rate. The purchasing power of each currency is determined in the process.