Which of the following statements is TRUE regarding the relationship between Gross National Income (GNI)and purchasing power parity (PPP)?
A)a nation with a low GNI will almost always have an even weaker PPP
B)GNI is inversely proportional to the PPP
C)the higher the GNI, the higher the PPP
D)a high GNI may not translate into strong PPP due to the enormous cost difference between goods in two different nations
E)GNI will always be higher in developed nations, but PPP will always be stronger in developing nations

Question

Quizplus · Accepted Answer

Gross National Income (GNI) and Purchasing Power Parity (PPP) are related but not directly proportional. A high GNI indicates a country's total income, but PPP adjusts for the cost of living and inflation rates, meaning a country with a high GNI might not have a strong PPP if the cost of goods and services is significantly higher compared to other nations.

Which of the Following Statements Is TRUE Regarding the Relationship