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Purchasing Price Parity You are considering moving to Mexico from Washington DC since you can work from home anywhere on the planet. Your friend is

Purchasing Price Parity

  1. You are considering moving to Mexico from Washington DC since you can work from home anywhere on the planet. Your friend is a strong believer in free trade and argues that because of NAFTA that free trade will arbitrage all prices in Mexico to be the same as prices in the Unites States, as cheaper products in Mexico would be exported to sell for higher prices in the USA and vice versa. Is your friend right? Why or why not?
  2. Jason Hickel and other degrowthers wish to equalize global income so that all countries have the same income per capita, roughly at the current average global income. Assuming that wages are equalized across all countries, how much more or less would we expect a Big Mac to cost in the United States versus Brazil? Why?

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