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Purchasing Power Parity (PPP)

216 ratings | 27862 views
GCSE Economics
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Devon Devon (9 hours ago)
4:41, another way to look at it (and getting the same result) is if USA GDP is 16 and Japan GDP is18, and if cost of living is 3 times higher in Japan (big mac 6 vs 2 as seen above), then US GDP would become 48 ppp (3 times 16) vs 18 ppp for Japan. and by reducing this by dividing both by 3 ,you get 16 and 6. The problem with PPP is that though goods and services may be cheaper in one country, the person might not have be able to travel as tourist or purchasing a college education in a foreign where goods and services are more expensive, so 20,000 us dollar in country A might have the same buying power as 40,000 us dollar in the usa, but that 20,000 might not be enough to buy a college at a us college or to travel and have the same buying power as a person in the usa with a 40,000 dollar income.
cagri (2 months ago)
G man knows what's up
G Conomics (1 month ago)
Helen Ryan (3 months ago)
A very clear explanation. However, I am a little confused. If a basket of goods is 8 Big Macs costing U$ 2 = U$ 16, in Japan would the PPP be $6 x 8 Big Macs = $48?
Prateek Kumar Verma (2 months ago)
[email protected] is WITH RESPECT TO a particular country. It is just like fixing an axis so that one can compare economies. Here in this video, USA has been taken as reference hence [email protected] is calculated W.R.T. US(taking US cost for big mac). If you want to calculate same W.R.T. Japan then it would be $48 (8*$6) for US and $18 (3*$6) for Japan.
Sarason Salas (3 months ago)
Which basically means that when in the US the $16 gets you 8 Big macs...Now for you to get the same quantity (8) of Big macs in Japan @ $6 each you would need to have $48.
MrVpassenheim (6 months ago)
That was beautiful!
Krisjan Korf (10 months ago)
RIP headphone users @ 5:39
YounG TerK (22 days ago)
RIP myself haha
G Conomics (10 months ago)
Haha, apologies!
Loka Man (10 months ago)
really you are so great , best simple explanation, thanks alot
Evocative (11 months ago)
Best explanation on youtube, thank you.
Iam confused with my country.. Gdp ppp of my country is 3 times than nominal GDP
G Conomics. I live in indonesia... And i wanna ask you more... What is the real GDP per capita of my country?? I see many people rich in here.. But with many poor people too.. Inequality is quite high.. Because our geography is Archipelago.. Its make it harder to share the wealth across the country
G Conomics (11 months ago)
It will be a consequence of the purchasing power of the USD in your country - where do you live?
G Conomics. My country have 4000 USD Per Capita Nominal GDP. And 13000 USD GDP PPP. Why?
G Conomics (11 months ago)
Please clarify your question.
Tim Felsky (11 months ago)
Lighting at the end a bit frightening mate.
James Lester (11 months ago)
Why does the US PPP not reduce to $8?
G Conomics (11 months ago)
James Lester if it reduced to $8, the US could only purchase 4 Big Macs rather than 8.
Fox Boucher (1 year ago)
Alija Saracevic (1 year ago)
Very helpful!
Keenan Patel (1 year ago)
Does that mean that the yen is overvalued
G Conomics (1 year ago)
Keenan Patel yes, that is correct.
Brunxs20 (1 year ago)
Got a jumpscare at 5:30 lol :0
Brunxs20 (1 year ago)
I mean 5:40 xD
i try to understand all those strategies of Purchasing power in parity
Radha Madhav (1 year ago)
help full
Carlos Baide (1 year ago)
Very good explanation, thank you very much!
berk (1 year ago)
Great video for those looking for a simple explanation for PPP. Cheers.
jack pearce (1 year ago)
Xamzed (1 year ago)
Xamzed (1 year ago)
G Conomics (1 year ago)
I will be uploading one video per week on each extract.
Roshan Beadle (1 year ago)
Very helpful, thank you.

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