The theory of purchasing-power parity states that a unit of a country's currency should be able to buy the same quantity of goods in foreign countries as it does in the domestic economy.

Purchasing-power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to determine the relative value of the currencies.

Currency

The system of money in general use in a particular country, used for buying and selling goods and services.

Foreign Countries

Nations other than one's own, especially when considered as the context for international trade, diplomacy, or cultural exchange.