One way of translating salaries is to first compare the value of the currencies of the countries in question. This is usually done by using exchange rates that tell us the value of one currency calculated in terms of another.
Exchange rates, determined by the foreign exchange markets around the world, reflect the markets' view of each country's economic and political situation. By using exchange rates, a salary in yen in Tokyo can be converted into U.S. dollars to make it comparable to a salary in Los Angeles. Or it can be converted into French francs to make it comparable to a salary in Paris.
Because the cost of living varies widely from one country to another, however, it is difficult to translate salaries by simply using currency exchange rates. If an apartment costs three times as much in Tokyo as in Los Angeles or Paris, a higher salary in Japan does not necessarily mean a Japanese worker is better off than an American or French worker.
It is sometimes more valuable to look at what salaries will actually buy in each country. A salary's "purchasing power" tells us how many goods and services it can actually buy. Comparing the cost of a group of goods and services from country to country, therefore, gives us a more reliable exchange rate, called purchasing power parity (PPP). The PPP exchange rate is calculated by looking at the cost of groceries and other items such as vacation trips, automobiles, insurance, and rent in different countries.
By choosing this basket of goods and services and calculating their cost in different countries around the world, we can compare the purchasing power or "real" value of salaries from country to country. Although one country may be richer in terms of the amount of money each citizen owns or earns, what counts in the long run is what each person can do with this wealth.
2.1.4.2 Ответьте на вопросы по тексту В
1 How can a nation’s wealth be determined?
2 What do the exchange rates tell us?
3 What do the exchange rates reflect?
4 Does the cost of living vary from one country, to another?
5 What tell us how much goods and services a person can buy?
6 How can we compare salaries in different countries?
7 What do we call “purchasing power parity” (PPP)?
8 What is PPP exchange rate calculated by?