Robert Summers and Alan Heston Published Data for 130 Countries

question 167

Multiple Choice

Robert Summers and Alan Heston published data for 130 countries that used purchasing power parity, rather than market exchange rates, to compare GDP across countries. As a result, measured per capita incomes of developing countries rose relative to per capita incomes in developed countries. This is most likely because:

• A)prices of standard goods in developing countries are generally higher than those in developed countries.
• B)prices of standard goods in developing countries are generally lower than those in developed countries.
• C)nonmarket activity is more extensive in developing countries than in developed countries.
• D)nonmarket activity is less extensive in developing countries than in developed countries.