Purchasing power parity (PPP) in the goods markets would hold if all goods were:

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) in the goods markets holds when goods are freely tradable across borders, meaning that they can be easily bought and sold between different countries. If goods are only traded domestically, then PPP does not hold because there may be different prices for the same goods in different countries. Similarly, if goods are only manufactured domestically or subject to inspection at ports, it would not guarantee the existence of PPP.

Purchasing Power Parity (PPP) in the Goods Markets Would Hold