How can I say money is valued differently in different countries?

Question

ie if you only had a pound in this country you would be poor but in another country the equivalent of a pound might make you rich?

Answer 1

People from different societies have different ideas when it comes to deciding the question, "How much money constitutes wealth?"

Answer 2

You may be referring to the concept of ARBITRAGE, whereby a trader purchases money in one country and simultaneously sells the money in another country at a higher price.

Some kinds of arbitrage are completely risk-free—this is pure arbitrage. For instance, if EUROS are available more cheaply in dollars in London than in New York, arbitrageurs (also known as arbs) can make a risk-free PROFIT by buying euros in London and selling an identical amount of them in New York. Opportunities for pure arbitrage have become rare in recent years, partly because of the GLOBALISATION of FINANCIAL MARKETS. Today, a lot of so called arbitrage, much of it done by hedge funds, involves assets that have some similarities but are not identical. This is not pure arbitrage and can be far from risk free.

According to ARBITRAGE PRICING THEORY, the price of a financial asset reflects a few key risk factors, such as the expected rate of interest, and how the price of the asset changes relative to the price of a portfolio of assets. If the price of an asset happens to diverge from what the theory says it should be, arbitrage by investors should bring it back into line.

According to the EFFICIENT MARKET HYPOTHESIS, you can’t beat the market, because the PRICE of a financial ASSET reflects all the INFORMATION available and responds only to unexpected news. Thus prices can be regarded as optimal estimates of true investment value at all times. It is impossible for investors to predict whether the price will move up or down (future price movements are likely to follow a RANDOM WALK), so on AVERAGE an investor is unlikely to beat the market. This belief underpins ­ARBITRAGE PRICING THEORY, the CAPITAL ASSET PRICING MODEL and concepts such as BETA.

Answer 3

You could say their is a different "price" with different types of money. :P  

Answer 4

The costs of goods and services varies from country to country.  

Answer 5

The value of a pound differs greatly from country to country.