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What Real-World Complications Keep Purchasing Power Parity from Being a Complete

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Essay

What real-world complications keep purchasing power parity from being a complete explanation of exchange-rate fluctuations in the long run? Explain.


Definitions:

Statoliths

Granules of loose sand or calcium carbonate found in statocysts.

Otoliths

Small calcium carbonate crystals in the saccule and utricle of the inner ear; sense gravity and are important in static equilibrium.

Stereocilia

Hairlike projections of hair cells; microvilli that contain actin filaments.

Lateral Line Organs

Specialized sense organs in aquatic vertebrates that detect movement and vibration in the surrounding water.

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