How does Purchasing Power Parity (PPP)adjust Gross National Income per capita?
A) PPP takes into account the age and productivity of the local populations.
B) PPP takes into account the rise and fall of the Dow Jones Industrial Average.
C) PPP takes into account the 2008-2009 economic decline.
D) PPP takes into account the strength or weakness of local currencies.
E) It is a composite indicator that takes into account all of the above features.

Question

Quizplus · Accepted Answer

PPP adjusts Gross National Income per capita by taking into account the strength or weakness of local currencies. It is based on the idea that a unit of currency should be able to buy the same amount of goods in different countries. Therefore, PPP makes adjustments for the cost of living in different countries to provide a more accurate comparison of economic well-being. Choices A, B, C, and E are not accurate descriptions of how PPP works.

How Does Purchasing Power Parity (PPP)adjust Gross National Income Per