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.

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Definitions:

Collection Policies

Guidelines established by a business to manage the collection of accounts receivable or debts owed to it.

Subsidiary Ledger

a detailed ledger that contains the financial transactions of a specific subsidiary account, summarizing its details, and supporting the general ledger.

Control Account

A general ledger account that summarizes the balances of a set of detailed subsidiary ledger accounts.

General Ledger

A complete record of all financial transactions over the life of a company, serving as the primary source of information used to create financial statements.