If GDP per capita at PPP is lower in Country X than it is in Country Y, ________.
A) it costs more to buy the same basket of goods in Country X than it does in Country Y
B) it costs less to buy the same basket of goods in Country X than it does in Country Y
C) it costs the same to buy the same basket of goods in both countries
D) this is insufficient information to make any assumptions about the cost of living in these two countries.

Question

Quizplus · Accepted Answer

GDP per capita at PPP measures the average income and purchasing power of citizens in each country. If Country X has a lower GDP per capita at PPP than Country Y, it means that the average person in Country X has less purchasing power than the average person in Country Y. Therefore, it costs more to buy the same basket of goods in Country X than in Country Y.

If GDP Per Capita at PPP Is Lower in Country