What is the relationship between GDP(nominal) and GDP(Purchasing Power Parity)?

Question

If a country has a Nominal GDP Per Capita of $5,000, but has a PPP GDP Per Capita of $20,000, does that mean I can take $5,000 to that country and expect it to go as far as $20,000 would in the US?

In: Economics

Answer 1

Basically yes it means what you say.

Let’s say in the US you make enough money to buy one Big Mac a year. But in Thailand someone that works all year can also buy one Big Mac there. They aren’t making as much money, but they can buy the same amount as you in real terms.