The following table shows economic data for two countries.

-Refer to the table above.When comparing the PPP-adjusted GDP per capita in Countries A and B,what can we say about the difference in standard of living between the two countries?
A) Because the cost of living is lower in Country A, its standard of living is lower even when we look at the PPP-adjusted GDP per capita.
B) The exchange-rate-based measure of GDP per capita ignores the fact that the cost of living is lower in Country A.
C) When using the PPP-adjusted measure, the standard of living appears to be higher in the country with the lower exchange-rate-based measure for GDP per capita.
D) Both B and C.

Question

The following table shows economic data for two countries.
 
-Refer to the table above.When comparing the PPP-adjusted GDP per capita in Countries A and B,what can we say about the difference in standard of living between the two countries?
A) Because the cost of living is lower in Country A, its standard of living is lower even when we look at the PPP-adjusted GDP per capita. 
B) The exchange-rate-based measure of GDP per capita ignores the fact that the cost of living is lower in Country A. 
C) When using the PPP-adjusted measure, the standard of living appears to be higher in the country with the lower exchange-rate-based measure for GDP per capita. 
D) Both B and C.

Quizplus · Accepted Answer

B explains that exchange-rate-based measures do not account for differences in the cost of living, which is crucial for comparing standards of living. C indicates that PPP adjustments can reveal a higher standard of living in a country that might appear poorer when only exchange-rate-based GDP per capita is considered. Together, they provide a more complete understanding of how PPP adjustments affect comparisons of standard of living between countries.

The Following Table Shows Economic Data for Two Countries