Purchasing power parity more likely occurs under all the following conditions except

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Purchasing power parity is less likely to occur with a non-convertible currency as there may be restrictions on the exchange of currencies which can affect the parity of purchasing power. All the other options listed tend to facilitate the occurrence of purchasing power parity. Lower transportation costs reduce the costs of trade, encouraging the exchange of goods and services across borders. More non-tradable goods reduce the impact of differences in tradeable goods prices across different countries. Being more open to imports generally results in a wider range of products, which increases competition and puts downward pressure on prices, while flexible prices adjust more easily to changes in supply and demand, keeping prices in check.

Purchasing Power Parity More Likely Occurs Under All the Following