Purchasing Power Parity (PPP)
The amount of currency units required to purchase a common basket of goods and services that can be purchased with one unit of the reference economy's currency.
Price Level Index (PLI)
The ratio of PPPs to exchange rates with respect to a common currency. PLI expresses the general price level in an economy as percentage of reference economy's price level.
Expenditure that has been converted to common currency by PPP, and hence, valued at a uniform price level across economies.
Expenditure that has been converted to common currency by Exchange Rate without adjusting for the differences in prices of goods and services across economies.
Per Capita Expenditure
Total expenditure divided by total population of a given economy. Per capita expenditure measures standard of living in an economy. This can be expressed either in real or nominal terms.
An important property of PPP whereby the direct PPP between any two economies yields the same result as an indirect comparison via any other economy.
Base Country Invariance
The relativities between the PPPs, Price Level Indexes, and volume indexes of economies are not affected by either the choice of reference economy or currency.
Gross Domestic Product (GDP)
When estimated from expenditure side, GDP is the total value of the final consumption of households, non-profit institutions serving households, and general government, gross capital formation plus balance of exports and imports.