Among the reasons that purchasing power parity (PPP) does not consistently occur are:

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All of the options presented contribute to the occurrence or lack thereof of PPP. Interest rate differentials impact exchange rates as investors seek higher returns in countries with higher interest rates, which can lead to currency appreciation. National income differentials and government controls affect exchange rates by influencing the supply and demand dynamics for a currency. PPP requires that prices for the same goods are equal across countries, but if there is no substitutable goods available, supply and demand cannot adjust to bring about PPP.

Among the Reasons That Purchasing Power Parity (PPP) Does Not