If the Prices Used in Two Countries Are Exactly the Same

question 24

Multiple Choice

If the prices used in two countries are exactly the same, then a comparison of the per capita GDPs of the two countries provides:

• A)no insight into living standards.
• B)some insight into living standards depending on the extent of non-market activities in each country.
• C)some insight into living standards depending on the accuracy of purchasing power parity.
• D)an exact comparison of living standards.

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Definitions:

Perfect Tender Rule

The requirement that a seller deliver goods in conformity with the contract, down to the last detail.

Rigidity

The quality of being unable to bend or be forced out of shape; lack of flexibility or adaptability.

Honesty in Fact

The genuine belief or actual state of mind devoid of intent to deceive or defraud.

Good Faith

An honest intention to act without taking an unfair advantage over another party, typically related to the fulfillment of contracts and agreements.