Would a province with a very low cost of living have a PPP-adjusted GDP higher o

Question

Would a province with a very low cost of living have a PPP-adjusted GDP higher or lower than its GDP calculated without PPP-adjustment?

A. The province will have a higher GDP after adjusting for PPP since it has a high cost of living and a given number of dollars will purchase fewer goods and services in that province than in a state with a lower cost of living.

B. The province will have a lower GDP after adjusting for PPP since it has a low cost of living and a given number of dollars will purchase fewer goods and services in that province than in a state with a higher cost of living.

C. The province will have a higher GDP after adjusting for PPP since it has a low cost of living and a given number of dollars will purchase more goods and services in that province than in a state with a higher cost of living.

D. The province will have a lower GDP after adjusting for PPP since it has a low cost of living and a given number of dollars will purchase more goods and services in that province than in a state with a higher cost of living.

Explanation / Answer

Option C is correct

- The province will have a higher GDP after adjusting for PPP since it has a low cost of living and a given number of dollars will purchase more goods and services in that province than in a state with a higher cost of living. (PPP adjusted GDP corrects for the differences in the prices of the market basket across different countries)

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.