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 is Eileen most likely trying to determine?

A) Purchasing power parity.

B) Economic growth rate.

C) Gross domestic income.

D) Gross national product.

A. Purchasing power parity

Explanation:

Purchasing power parity is a techniques that is used to determine the relative value or the exchange rates of currencies.

Eileen is using the purchasing power parity because she is comparing the cost effectiveness of buying a particular product in different countries using the dollar. The exchange rates of the currency of country X and country Y against will determine which country she will buy from.

In a nutshell, Purchasing power parity is a measurement of two currencies by taking the cost of living and inflation differences into account.