alleryStart learning →Why does PPP use a basket of goods rather than a single good?
ATo raise the final rate
BFrictions on one good cause errors
CBaskets are taxed at lower rates
DA single good is never priced
Answer & Solution
Correct answer: B. Frictions on one good cause errors
Poverty, tariffs and transport costs prevent trade in a single good, so a basket reduces the error.
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