Suppose a Burger King Whopper costs $3.54 in the United States. The Norwegian unit of currency is called the krona. If we estimate the cost of a Whopper in Norway at $3.54, we have used the concept of purchasing power parity to make the comparison.

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) is a theory which states that in the absence of transaction costs and other barriers, identical goods should have the same price when expressed in a common currency. Estimating the cost of a Whopper in Norway at the same price as in the U.S. reflects this concept.

Suppose a Burger King Whopper Costs $3