PPP???

Measuring economies can be very easy, but many figure the easy way is wrong. All countries worth measuring do their best to count all sales and purchases, so they can tax them, So we have the total sales and the total purchases, always a little bit off since the people counting don't manage to count everything correctly, when we know that total purchases have to equal total sales. So we take some number, maybe the average, maybe just sales, maybe just purchases, maybe a weighted average, and we get the total economy in the local currency, and there are official translations from every (significant) currency to every other (significant) currency. So we put the result for every economy in US$ or € or £, (or whatever) and we have a number for every economy worth measuring that allows us to rank all the economies of the world.

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Now consider two mythical islands. Both have crops and livestock, both build houses and boats and go fishing, but the fishing boats can't make it from one island to the4 other. Both use a rare, exotic, rather beautiful shell as currency, but one island has exactly twice as many of those shells as the other island. In New York City, the shells, no matter from which island, are worth $1, but on the island with twice as many shells, homes, boats, pounds of fruit and veggies and meat and fish cost twice as many shells. Both islands produce the exact same amount of everything, but one island has an economy worth twice as many US$ as the other island.

So, since both islands produce the exact same quantity and quality of everything, the Purchasing Power Parity (PPP) economies for the two islands are exactly the same, even though the US$ value of one economy is twice as much as the other, because they both produce exactly the same total outputs.

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Of course, in real life, we never have two economies like the two islands, both producing exactly the same quantity and quality of stuff, but one paying twice as much for it. So, in real life, the PPP economy is somewhat subjective, depending on how one counts things. Do any two real islands produce the exact same quantity of food, housing, boats, and fish? Probably not in real life. And are all prices exactly twice as many shells? Again, probably not.

So the final calculation of PPP is not so easy, and is always subject to question.