Under what circumstance would the U.S. dollar and the Canadian dollar be said to have achieved purchasing power parity?
The U.S. dollar and the Canadian dollar would be referred to have achieved purchasing power parity while the exchange rate reflects the comparative prices of a market basket of traded goods and services at the current exchange rate. There would be no incentive to transform U.S. dollars to Canadian dollars nor to convert Canadian dollars to U.S. dollars and purchase goods or services in the another country.