The most accurate way to compare standards of living throughout the world is to look at
A) total Gross Domestic Product (GDP).
B) GNP.
C) purchasing power parity.
D) foreign exchange rates.

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) takes into account the relative prices of goods and services in different countries and adjusts for exchange rate differences. This provides a more accurate reflection of what people can actually buy with their money in different countries, and therefore gives a better comparison of living standards. Total GDP or GNP may not accurately reflect the standard of living as it only considers the amount of goods and services produced in a country, without taking into account factors such as income inequality and distribution. Foreign exchange rates also do not provide an accurate comparison as they are subject to volatility and manipulation.

The Most Accurate Way to Compare Standards of Living Throughout