One reason purchasing power parity does not exactly hold is that many goods are not traded internationally.

Question

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Purchasing power parity assumes that identical goods are priced the same in different countries, but this assumption does not hold for many goods that are not traded internationally. Examples include non-tradable services, such as haircuts, medical care, and government services, as well as goods that are subject to different taxes, regulations, and distribution networks in different countries. Therefore, the actual prices of goods and services can differ significantly between countries, even after adjusting for exchange rates.

One Reason Purchasing Power Parity Does Not Exactly Hold Is