It is clear from the comment section to the previous post that there is a lot of confusion about PPP. Let me try to illustrate the basic ideas with an example, since my words don’t seem to be making an impact.
Assume that Saudi Arabia has a nominal GDP of $1000 billion, of which $600 billion is non-oil output and $400 billion is oil output. Let’s assume that the domestic and international prices of oil are the same for Saudi Arabia, but that other goods are 3.5 times as expensive in the US as in Saudi Arabia. In that case the Saudi GDP in PPP terms would be: