For absolute purchasing power parity to hold:

Question

Quizplus · Accepted Answer

Absolute purchasing power parity holds when the purchasing power of two or more currencies is the same when converted. This can only occur if products are identical in all markets, allowing for a direct comparison of prices across different currencies. Other options like transaction costs, interest rates, inflation rates, and tariffs do not directly relate to the concept of absolute purchasing power parity, which focuses on the comparability of product prices across different markets.

For Absolute Purchasing Power Parity to Hold