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On an Average-Exchange-Rate Basis GDP Per Worker in the United

Question 44

Multiple Choice

On an average-exchange-rate basis GDP per worker in the United States compared to India tends to be higher relative to the purchasing-power-parity basis (70 versus 13) because


A) international arbitrage doesn't work.
B) international arbitrage only works to equalize prices for the service sector.
C) international arbitrage is unable to equalize prices for the service sector.
D) people don't respond to price signals.

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