Which of the following is true?
A) Exchange-rate-based measures of income per capita are identical to PPP-based measures of income per capita.
B) Exchange-rate-based measures of income per capita differ from PPP-based measures of income per capita.
C) The gap between the income per capita in the United States and the income per capita in poorer countries is large when PPP-based measures are used.
D) The gap between the income per capita in the United States and the income per capita in poorer countries is small when exchange-rate-based measures are used.

Question

Quizplus · Accepted Answer

Exchange-rate-based measures of income per capita use the current market exchange rate, while PPP-based measures adjust for differences in the cost of goods and services across countries. Therefore, the two measures will differ. The correct answer cannot be A, C, or D because they are either false or incomplete statements.

Which of the Following Is True