Answer:
In reality, PPP doesn't always happen.
Step-by-step explanation:
Several reasons why PPP doesn't always happen
Transport and Trade Costs: Moving goods between countries isn't free. Things like shipping and taxes can make prices different.
Market Differences: Some markets have only a few big sellers (monopolies or oligopolies), so prices can vary.
Things You Can't Trade: Not everything can be easily sold in other countries, like services, so their prices don't always match exchange rates.
Different Inflation: If one country has higher inflation, its money loses value, making prices not match exchange rates.
Government Actions: Governments can control exchange rates, making them not match PPP.
Speculation and Feelings: People and investors can make exchange rates change based on feelings, not just PPP.
Quality and Preferences: Even if things seem the same, differences in quality or what people like can make prices different.
Income and Demand: Richer countries might pay more for things, even if PPP says they shouldn't.
Expectations: What people think will happen to exchange rates can make them change, even if PPP says something else.