Which of the following allows us to compare average levels of real production per person in different nations in a way that adjusts for differences in true costs of living?
A) nominal GDP based on purchasing power parity
B) per capita real GDP based on purchasing power parity
C) real GDP based on foreign exchange rates
D) per capita nominal GDP based on foreign exchange rates

Question

Quizplus · Accepted Answer

Per capita real GDP based on purchasing power parity allows us to compare average levels of real production per person in different nations in a way that adjusts for differences in true costs of living. This measure takes into account the purchasing power of money in each country, which can vary greatly even when exchange rates are the same. Nominal GDP based on purchasing power parity and real GDP based on foreign exchange rates do not fully account for differences in costs of living, while per capita nominal GDP based on foreign exchange rates does not adjust for the purchasing power of money in each country.

Which of the Following Allows Us to Compare Average Levels