Economists have long noted that non traded goods are cheaper in countries with lower GDP. For example,

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Economists have long noted that non traded goods are cheaper in countries with lower GDP. For example, in the United States, only the very, very rich have live in help, but that is quite common in India for upper middle-class families. Under these circumstances, would you expect purchasing power parity to be an accurate theory of exchange rates in the long run? Assuming that Big Macs use non traded goods in their production, should Big Macs be more expensive or less expensive in countries with the highest GDPs?
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Macroeconomics Principles Applications and Tools

ISBN: 978-0134420684

9th edition

Authors: Arthur O'Sullivan, Steven Sheffrin, Stephen Perez

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