To Calculate Purchasing Power Parity, the Figure Is Adjusted Based

question 75

Multiple Choice

To calculate purchasing power parity, the figure is adjusted based on

• A) the trading value of gold in the exchange market.
• B) the median cost of living in the top five economic nations.
• C) the status of the cost of living in the United States
• D) average daily exchange rates in the selected nation.
• E) limits set by each nation's government.

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Definitions:

Laspeyres Price Index

A price index calculated by taking the ratio of the total cost of purchasing a specified set of goods and services at current prices to the total cost of purchasing the same set of goods and services at base period prices, using base period quantities as weights.

Per Capita Income

The average income earned per person in a given area or country, calculated by dividing the total income by the population size.

Revealed Preferences

is an economic theory that infers consumers' preferences based on their purchasing habits, assuming that their choices reveal their preference structure.

Francs

A currency that was previously used in countries like France, Switzerland, Belgium, and Luxembourg, with some forms still in use today in a limited capacity.