Absolute purchasing power parity implies that:
A) the price of a basket of goods is cheaper in one country than in another.
B) the price of a basket of goods is more expensive in one country than in another.
C) the price of a basket of goods is the same in the two countries.
D) the exchange rate is artificially held constant.

Question

Quizplus · Accepted Answer

Absolute purchasing power parity states that the price of a basket of goods should be the same in two countries after converting currencies. Therefore, the correct answer is that the price of a basket of goods is the same in the two countries.

Absolute Purchasing Power Parity Implies That