When the currency of a country is stronger in foreign exchange markets than its PPP exchange rate,the dollar value of the country's GDP per capita when measured by current exchange rates is ________.

Question

Quizplus · Accepted Answer

When the currency of a country is stronger in foreign exchange markets than its PPP exchange rate, it means that the currency is overvalued, and goods and services in that country are relatively more expensive. This would lead to a higher dollar value of the country's GDP per capita when measured by current exchange rates compared to PPP exchange rates, since the former takes into account the overvalued currency. Therefore, the correct answer is B - larger than when measured by PPP exchange rates.

When the Currency of a Country Is Stronger in Foreign