Nontraded Goods and Purchasing Power Parity. Economists have long noted that nontraded goods are cheaper in countries with lower GDP. For example, in the United States, only the very, very rich have...

Nontraded Goods and Purchasing Power Parity. Economists have long noted that nontraded goods are cheaper in countries with lower GDP. For example, in the United States, only the very, very rich have live-in help, but that is quite common in India for upper middle-class families. Under these circumstances, would you expect purchasing power parity to be an accurate theory of exchange rates in the long run? Assuming that Big Macs use nontraded goods in their production, should Big Macs be more expensive or less expensive in countries with the highest GDPs?