3 ms·
> In Economy C, the workers who've been paid by the govt can then purchase 5000 Retina Macbook Airs at $1k each You are assuming transaction costs of 0 for int
by jvm 12y ago
> In Economy C, the workers who've been paid by the govt can then purchase 5000 Retina Macbook Airs at $1k each
You are assuming transaction costs of 0 for international trade. If transaction costs for international trade are zero, then yes, of course the PPP adjustment would be a non-op. In the real world that we live in, equivalent goods often have very different prices in different countries.