Per-capita GDP converted at market exchange rates does NOT paint an accurate picture of the market potential of an emerging market because ________.
A) it tends to overemphasize the role of pricing in driving growth in emerging markets
B) it overlooks the substantial price differences between advanced economies and emerging markets
C) prices are usually higher for most products and services in emerging markets
D) emerging markets do not support inward FDI

Question

Quizplus · Accepted Answer

Per-capita GDP converted at market exchange rates does not account for the differences in price levels between countries. It overlooks the fact that the same amount of money can buy more goods and services in emerging markets than in advanced economies due to lower prices, thus potentially underestimating the actual purchasing power and market potential in emerging markets.

Per-Capita GDP Converted at Market Exchange Rates Does NOT Paint