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What Determines the Purchasing Power of a Currency Relative to Another

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What determines the purchasing power of a currency relative to another under floating exchange rates?


Definitions:

Incongruous

Incongruous refers to something that is not in harmony or keeping with the surroundings or other aspects of something, often leading to a sense of discrepancy or inconsistency.

Distorted

The term distorted describes something that has been twisted out of its original, true, or natural shape, often leading to a misrepresentation of reality.

Inadequate

Lacking the quality or quantity required; insufficient for a purpose.

Clarification

The act of making a statement or situation less confused and more comprehensible.

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