When switching from the "current exchange rate" method to the "purchasing power parity" method, Russia's standard of living in dollars:
A) leapfrogs over that of Australia.
B) rises, but still remains far below that of Australia.
C) decreases.
D) rises almost to the level of Australia.
E) remains essentially the same.

Question

Quizplus · Accepted Answer

The purchasing power parity (PPP) method adjusts the GDP per capita of countries based on the relative cost of living and inflation rates, rather than using current exchange rates. This often results in a higher estimation of the standard of living in countries with lower costs of living, like Russia, compared to when using current exchange rates. However, despite this adjustment, Russia's standard of living, when measured by PPP, still remains significantly lower than that of a high-income country like Australia.

When Switching from the "Current Exchange Rate" Method to the "Purchasing