Absolute purchasing power parity If the law of one price were true for all goods and services,the purchasing power parity (PPP) exchange rate could be found from any individual set of prices. By comparing the prices of identical products denominated in different currencies,we could determine the "real"or PPP exchange rate that should exist if markets were efficient. This is the absolute version of the PPP theory.Absolute purchasing power parity If the law of one price were true for all goods and services, the purchasing power parity (PPP) exchange rate could be found from any individual set of prices. By comparing the prices of identical products denominated in different currencies, we could determine the “real” or PPP exchange rate that should exist if markets were efficient. This is the absolute version of the PPP theory