Absolute purchasing power parity indicates that the price level of the two countries should be equal when expressed in the same currency; or under the current exchange rate regime, the PPP condition holds only when the purchasing power of domestic equals to its equivalent in a foreign country. Absolute purchasing power parity links exchange rate to the price level of all goods. In a price relatively stable period, there would be no drastic fluctuations in the exchange rate. However, if inflation happens, a country’s price level is likely to fluctuate significantly; the exchange rate also will be very volatile. In practice, because different countries use different price indices to calculate the weight of the price level, thus equation (2-2) is not very feasible in practice. And, if there are some restrictions such as tariffs, quotas, and transportation fees, or price information between the two countries is not complete, absolute purchasing power parity will not hold.