Which of the following are theories meant to explain "Why price levels are lower in poorer countries"?
A) only Bhagwati-Kravis-Lipsey
B) only Balassa-Samuelson
C) only Goldberg-Knetter
D) Bhagwati-Kravis-Lipsey and Balassa-Samuelson
E) Bhagwati-Kravis-Lipsey and Goldberg-Knetter

Question

Quizplus · Accepted Answer

The Bhagwati-Kravis-Lipsey and Balassa-Samuelson theories both offer explanations for why price levels might be lower in poorer countries. The Bhagwati-Kravis-Lipsey model focuses on the idea that goods are cheaper in poorer countries due to differences in productivity in the tradable goods sector, while the Balassa-Samuelson effect suggests that differences in productivity between tradable and non-tradable goods sectors lead to lower prices in poorer countries.

Which of the Following Are Theories Meant to Explain "Why