41. When calculating purchasing-power par ities, the following observations should be taken into account: (a) The weights chosen should be characteristic of the economic structures of the countries; (b) Transitivity should be established. In the case of three countries, this mearis that P(A/B) = P (A/C) /P(B/C) , where P(A/B) represents the parity of COLIntry A relative to country B and where C represents a third country. This quality is often incompatible with the preceding condition; (c) International price comparisons based on the weights of one country understate that country’s expenditures in relation to those of other countries. ‘There is a negative correlation between prices and quantities; (d) Additivity makes it possible to determine the value of aggregates by simple addition of their component parts; (e) The factor reversal test is used to verify that the product of the price and quantity indexes is equal to the ratio of values. 42. The quality of the comparisons depends on a proper correspondence in the list of goods and services for the countries studied as regards both the quality of the products selected and the weights used. Highly detailed studies should be made to demonstrate the similarity of the products and their comparability. A comparison between two members of a group of States is affected by the characteristics of the group. If emphasis is to be put on comparisons between two particular countries within a larger group of countries, use may be made of a method which has been advocated by Professor G. Hill i/ who has proposed the following procedure for GDP (gross domestic product) comparisons: (a) The United Nations Statistical Office would issue a list of products for which all countries are to furnish prices; / . . . A/40/421 English Page 16 (b) A supplementary List could then be drawn up by, for example, the 
**Analysis**
The text appears to be discussing the methodology and principles behind calculating purchasing-power parities, a concept related to international trade and economics. It highlights the importance of proper weighting, transitivity, and additivity in the calculation process. The text also mentions the need for a proper correspondence in the list of goods and services for the countries studied, which suggests a focus on macroeconomic indicators.

**Category**
International trade, Economics