Parity - a word borrowed from the Latin language, which is written as "paritas" and means equality. In Russian, the meaning of the word "parity" implies the equality of parties (two or more) in one or another aspect. In order to understand the correct application of the word, it is necessary to delve deeper into its interpretation.
What is parity, and how to apply it in everyday life? It can have several interpretations, such as: equality of parties, goals, duties and other factors. At the same time, parity refers to the ratio between the currency units of different countries, which can be set in relation to another currency, gold and even to a product, which will be defined as purchasing power parity. Separately, legal parity is actively used in judicial practice, and military parity or equality in the strength of strategic weapons.
The word "parity" is used in almost all spheres of human life, but some of its types are actively used for global interaction by countries.
Situations in which currency parity is used
Every person at least once in his life came across the concept of "currency parity," even if he did not use this expression.
Currency parity is an established expression, which means the ratio of the exchange rates of two or more countries, ensuring equilibrium in supply and demand in each individual case. It is established by each state officially, relying on the provision of a country's gold reserve or on purchasing power.
Under currency parity, they can mean narrower concepts, depending on how the monetary units of countries are provided and supported:
- Gold parity - the ratio of the monetary units of countries is provided by gold.
- Coin parity - is determined by silver or gold security of the currency.
- Nominal parity - applicable when another monetary unit or metal is taken as a standard in countries.
- Price parity - equilibrium is achieved based on the price of various goods.
Separately distinguish the concept of disparity, that is, violation of the equilibrium of prices, when a change in one area does not correspond and does not balance the changes in another industry. This phenomenon is most often observed in countries during the reformation period.
Consumer parity and its features
Purchasing power parity is easiest to interpret based on global market examples. Equilibrium should be achieved by maintaining a single price for the same product or products for different countries, taking into account the established exchange rate. Amounts spent on the same product for different countries should be equal, taking into account the conversion of one currency into another.
In its purest form, consumer parity is a rarity. Amounts that countries spend on the same product may be subject to change due to duties, fines, and related costs.
The use of parity in jurisprudence
Legal parity is a common expression in determining equality in the representation of two or more parties in judicial practice.
It is used when considering cases in arbitration courts, in particular when considering labor disputes.
The importance of military parity in world practice
Military, military-strategic, nuclear parity is the equality of world powers or their groups, which is determined by the level of weapons, including the volume of nuclear weapons.
One of the most important indicators in the field of armed forces.