Which of the following reasons can explain why purchasing power parity doesn't hold?

Question

Quizplus · Accepted Answer

All of these factors can contribute to the failure of purchasing power parity to hold. Transactions costs make it costly to exchange currencies, which can affect exchange rates. Nontradables are goods and services that cannot be easily traded internationally, so their prices are more affected by local supply and demand factors than by exchange rates. Trade restrictions can also interfere with the free movement of goods and services across borders, which can also affect exchange rates.

Which of the Following Reasons Can Explain Why Purchasing Power