Question

The GDP per capita of a country is lower than that of france. if the GDP per capita of the country is adjusted for PPP, the country's revised GDP is higher than that of france. which of the following is most likely true about the country?
a. cost of living in the country is higher than that of france
b. the cost of living in the country is approximately equal to that of france
c. the cost of living in the country has increased over the past decade
d. the cost of living in the country is lower than that of france

Answer 1

Answer:

D. The cost of living in the country is lower than that of France

Explanation:

PPP or Purchasing Power Parity is a measure of the cost of living in different countries. When GDP Per Capita is computed accounting for PPP, significant differences can show up between this measure and Nominal GDP Per Capita, this is because of differences in the cost of living among countries.

If the GDP Per Capita Nominal of a country is lower than that of France, it means that measured by US Dollars, the other country produces less output per person than France. However, if the GDP Per Capita PPP of the same country is higher than that of France, it means that even if output is less, people in the other country can buy more things with less income than people in France. (Remember than when calculating GDP, output is the same as income).