the GDP per capita of a country is lower than that of france. if the GDP...

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

Solutions

Expert Solution

The cost of living in the country is lower than that of France is the correct Answer because if the GDP of a country has been adjusted for PPP, i.e., purchasing power parity, and the result is higher GDP then it means the country has a lower cost of living (more purchases must have been made), only then it would be able to purchase more to make the PPP well enough to adjust for GDP. Higher cost of living would not have created the GDP higher of any country. it would have done the opposite.

Let me tell you why other options are not correct-

if the cost of living would be same, them the GDP before adjusting for PPP and after adjusting for PPP would not have been different. It changed, thus it cannot be possible that cost of living is same for both the countries. Thus, option b goes wrong.

It can not be a matter of decade when we talk about the GDP of a country for a particular year. GDP is always calculated in term of a single year. So option c is wrong.

Rahul Sunny answered 1 year ago

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