The concept of 'Purchasing Power Parity' is used primarily for:
A. Measuring unemployment rates
B. Calculating fiscal deficit
C. Determining domestic interest rates only
D. Comparing the real value of currencies and living standards across countries
Answer: Option D
Solution (By JKSSB Mock Tests)
PPP exchange rates equalise the purchasing power of different currencies by eliminating differences in price levels, allowing better comparison of real income and living standards.
Explanation:
Primary deficit = Fiscal deficit − Interest payments. It indicates the borrowing requirement of the government excluding interest payments on previous borrowings.
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