Purchasing power parity
When can you say that the U.S. dollar and the Canadian dollar have achieved purchasing power parity?
Expert
The U.S. dollar and the Canadian dollar would be considered to have achieved purchasing power parity when the exchange rate reflects the relative prices of a market basket of traded goods and services at the current exchange rate. There would be no incentive to convert U.S. dollars to Canadian dollars and also to convert Canadian dollars to U.S. dollars and purchase goods or services in the other country.
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