Calculating Relative Purchasing Power
In 2022, a comparison of average income per person showed Indonesia's at 8.6% of Sweden's when using the market exchange rate. However, when the comparison was adjusted for the actual cost of goods and services in each country, Indonesia's average income was 22.7% of Sweden's. Based on this data, calculate by what factor the Indonesian currency's domestic buying power is greater than what the market exchange rate suggests. Briefly explain your calculation.
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In 2022, a comparison of average income per person between Indonesia and Sweden showed two different results. When using the daily market currency exchange rate, Indonesia's average income was 8.6% of Sweden's. However, when the comparison was adjusted to account for the actual cost of an identical basket of goods and services in each country, Indonesia's average income was 22.7% of Sweden's. What is the most logical conclusion that can be drawn from this data?
Calculating Relative Purchasing Power
International Salary Comparison
In 2022, data showed that Indonesia's average income per person was 8.6% of Sweden's when using market currency exchange rates. However, when adjusted for what goods and services that income could actually buy in each country, the figure rose to 22.7%. Based on this information, one can conclude that the market exchange rate overstates the domestic purchasing power of the Indonesian rupiah.
In 2022, a comparison of average income per person showed that Indonesia's was 8.6% of Sweden's when using market currency exchange rates. However, when the comparison was adjusted for the actual cost of goods and services in each country, the figure was 22.7%. Based on these figures, the domestic buying power of the Indonesian rupiah was approximately ____ times greater than the market exchange rate suggested, relative to the Swedish krona. (Round your answer to one decimal place).