Which of the following statements is the most accurate?
A) The prices of identical commodity baskets, when converted to a single currency, are the same across countries.
B) The prices of identical commodity baskets, when converted to a single currency, differ substantially across countries.
C) The prices of identical commodity baskets, when converted to a single currency, do not differ substantially across countries.
D) The prices of identical commodity baskets, when converted to a single currency, are often the same across countries.
E) The prices of identical commodity baskets, when converted to a single currency, are the same across countries more than 50% of the time.

Question

Quizplus · Accepted Answer

The concept of purchasing power parity (PPP) suggests that the prices of identical commodity baskets, when converted to a single currency, should be the same across countries. However, in reality, there are significant differences due to factors such as trade barriers, transportation costs, and tariffs. Therefore, choice B is the most accurate statement as it acknowledges the reality of the situation.

Which of the Following Statements Is the Most Accurate