One reason that the U.S. dollar may distort real income and standard of living figures in foreign countries is that:

Question

Quizplus · Accepted Answer

The value of the U.S. dollar fluctuates on the global exchange market. This means that as exchange rates change, the value of goods and services in foreign countries can appear to shift even if there has been no real change in their local economies. Therefore, when income and standard of living figures are compared across countries, using the U.S. dollar as a benchmark can be misleading as it does not accurately reflect the true purchasing power of that currency in the country being compared.

One Reason That the U