What is the term used to explain what a nation’s currency actually buys in goods and services?

Purchasing Power Parity

The American economy is the largest in the world, but unlike in the sphere of military power, the US faces credible competitors in the world economy. This becomes even clearer if we consider the world economy in Purchasing Power Parity (PPP) terms as in the graphic on the right. PPP is what a nation’s currency actually buys in goods and services.