Assume a canned soft drink costs $1 in the US and $1.30 in Canada.At the same time,the currency per US dollar is C$1.30.Which one of the following conditions exists in this situation?

Question

Quizplus · Accepted Answer

Absolute purchasing power parity exists when the price of identical goods is the same in different countries when expressed in a common currency. Here, the soft drink costs $1 in the US and C$1.30 in Canada, which is equivalent to $1 when converted using the exchange rate of C$1.30 per US dollar.

Assume a Canned Soft Drink Costs $1 in the US