The use of purchasing power parity prices
A) decreases the real GDP per person statistics published by the International Monetary Fund.
B) weakens the validity of cross country comparisons of economic welfare.
C) increases the amount by which U.S. GDP is larger than that of any other nation.
D) accounts for differences in the prices of the same goods in different countries when measuring real GDP.

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) prices are used to adjust the economic measurements to account for differences in price levels between countries. This allows for more accurate comparisons of the economic output and living standards across countries by considering the relative cost of living and inflation rates, rather than just using market exchange rates.

The Use of Purchasing Power Parity Prices