What does purchasing-power parity imply?
A) that real incomes should be the same in all countries
B) that the nominal exchange rates should be equal to 1 for all currencies
C) that the price of a standard hamburger should be the same everywhere
D) that the rent for an apartment should be the same everywhere

Question

Quizplus · Accepted Answer

Purchasing-power parity (PPP) implies that in the absence of transportation and other transaction costs, identical goods should have the same price in different countries when prices are converted into a common currency. This concept is often illustrated with the example of a standard product, like a hamburger, to explain how PPP works across different countries.

What Does Purchasing-Power Parity Imply