This table shows the price-level adjustment as compared to the United States.
According to the table shown,if Bob is earning $30,000 in the United States and Bill is earning $40,000 in Mexico,what can be said about their standards of living?

Question

This table shows the price-level adjustment as compared to the United States. 
According to the table shown,if Bob is earning $30,000 in the United States and Bill is earning $40,000 in Mexico,what can be said about their standards of living?

Quizplus · Accepted Answer

The table shows that the price level adjustment for Mexico is 42.5%, which means that Bill's purchasing power in Mexico is less than that of Bob in the United States. Therefore, even though Bill is earning more in nominal terms, his real income in terms of purchasing power is lower than Bob's. Hence, Bill's standard of living is lower than Bob's.

This Table Shows the Price-Level Adjustment as Compared to the United