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"High-Income Countries Have a Price Level Which Is Much Higher

Question 3

Multiple Choice

"High-income countries have a price level which is much higher than the low-income countries." Which of the following is most likely to explain this price differential?


A) With the development process of a nation, its productivity in making traded goods rises much faster than that in making non-traded goods.
B) Traded goods are much more sensitive to the income levels than are non-traded goods and services.
C) Prices of non-traded goods and services are relatively stable across high and low-income nations.
D) Labor involved in production of non-traded goods and services in high-income nations receive lower wages than the labor producing traded goods.

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