In order for the condition E$/HK$ = Pus/PHK to hold,

In order for the condition E_$/HK$ = Pus/P_HK to hold, what assumptions does the principle of purchasing power parity make?

A.No transportation costs and restrictions on trade; commodity baskets that are a reliable indication of price level.

B.Markets are perfectly competitive.

C.The factors of production are identical between countries.

D.No arbitrage exists.

E.All of the above.

Answer: E