The theory of purchasing-power parity states that a unit of a country's currency should be able to buy the same quantity of goods in foreign countries as it does domestically.

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This is the basic premise of the theory of purchasing-power parity. However, in reality, there may be factors such as market imperfections and trade barriers that can cause deviations from this theory.

The Theory of Purchasing-Power Parity States That a Unit of a Country's