Purchasing power parity assumes all products and services are traded easily and without cost across borders.

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Purchasing power parity (PPP) is an economic theory that suggests that the exchange rate between two currencies should equal the ratio of the two countries' respective price levels multiplied by the exchange rate of their currencies. PPP assumes that goods and services are traded easily and without cost across borders, allowing for comparisons of living standards and economic performance between countries.

Purchasing Power Parity Assumes All Products and Services Are Traded