If Croatia's price level is higher than the U.S. price level, Croatia's dollar-denominated GDP, calculated using price adjustments, will appear smaller than if simply calculated with the exchange rate.

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If the price level in Croatia is higher than in the U.S., then the purchasing power of the Croatian currency is lower. As a result, the adjustment for price differences will result in a smaller dollar-denominated GDP for Croatia compared to simply using the exchange rate.

If Croatia's Price Level Is Higher Than the U