U.S. dollars but also in PPP dollars—that
is, adjusted with the help of a purchasing
power parity (PPP) conversion factor.
The PPP conversion factor shows the
number of units of a country’s currency
required to buy the same amount of
goods and services in the domestic market
as one dollar would buy in the United
States. By applying this conversion factor,
one can, for example, convert a country’s
nominal GNP per capita (expressed in
U.S. dollars in accordance with the market
exchange rate of the national currency)
into its real GNP per capita (an
indicator adjusted for the difference in
prices for the same goods and services
between this country and the United
States, and independent of the fluctuations
of the national currency exchange
rate). GNP in PPP terms thus provides a
better comparison of average income or
consumption between economies.