Which of these refers to the relative ability of two countries' currencies to buy the same basket of goods in those two countries?
A) Comparative advantage
B) Purchasing power parity
C) GNP per capita
D) Relative HDI

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) refers to the relative ability of two countries' currencies to buy the same basket of goods in those two countries. It takes into account differences in the cost of living and inflation rates between the two countries. Comparative advantage refers to the ability of a country to produce a particular good or service more efficiently than another country. GNP per capita measures the total economic output of a country divided by its population, while relative HDI assesses a country's level of human development based on factors such as life expectancy, education, and income.

Which of These Refers to the Relative Ability of Two