What does it mean to say that a currency is above purchasing power parity?
According to an article in the New York Times published in mid-2010, “The euro, which was trading around $1.25 on Friday, is still above ‘purchasing power parity.’”
a. What does it mean to say that a currency is above purchasing power parity?
b. How is it possible to tell whether a currency is above or below purchasing power parity?