Which of the following would NOT prevent purchasing power parity from holding?

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) theory states that in the absence of transaction costs and barriers to trade, the price of identical goods should be the same across different countries when prices are expressed in a common currency. Fluctuations in foreign exchange rates are a mechanism through which PPP adjusts rather than a barrier to PPP holding. High transportation costs, non-tradable goods, and tariffs and quotas all represent barriers to trade or transaction costs that can prevent PPP from holding by causing price differences for the same goods across countries.

Which of the Following Would NOT Prevent Purchasing Power Parity