Comparing GDP across countries is unrealistic unless we make adjustment in exchange rates to take into account differences in the cost of living via
A) real GDP.
B) purchasing power parity.
C) price index.
D) international GDP.

Question

Quizplus · Accepted Answer

Comparing GDP using nominal exchange rates can be misleading as it does not take into account the differences in the cost of living between countries. Purchasing power parity helps to adjust for these differences by comparing the amount of goods and services that can be purchased in different countries with the same amount of currency. Therefore, B is a better choice than A, C, or D.

Comparing GDP Across Countries Is Unrealistic Unless We Make Adjustment