Under what condition would the U.S. dollar and the Canadian dollar said to be have achieved purchasing power parity?
The U.S. dollar and the Canadian dollar would be assumed to have achieved purchasing power parity while the exchange rate reflects the relative prices of market basket of traded goods and services at the present exchange rate. There would be no incentive to change U.S. dollars to Canadian dollars or to convert Canadian dollars to U.S. dollars and purchase goods or services in the other country.