To get a more accurate view of the size of countries' economies, we first need to convert each country's GDP to the dollar using ________ and then adjust for ________.
A) the interest rate; the exchange rate
B) the exchange rate; price level differences
C) price level differences; the interest rate
D) the exchange rate; fiscal policy
E) fiscal policy; the exchange rate

Question

Quizplus · Accepted Answer

To get a more accurate view of the size of countries' economies, we need to convert their GDP to a common currency, which is typically the US dollar. This is done by using exchange rates. However, exchange rates do not account for differences in prices between countries. Therefore, we also need to adjust for price level differences to get a more accurate view of each country's economy. In this way, we can make comparisons between countries more accurate.

To Get a More Accurate View of the Size of Countries