Difficulties Arise When Comparing Factor Prices Across Different Countries

question 15

Multiple Choice

Difficulties arise when comparing factor prices across different countries. Rather than compare costs for individual products by means of the prevailing exchange rate, economists prefer to calculate prices for a particular basket of goods-a fixed list of common items-and compare the cost of that basket in one country with its cost in another. This is known as the……..

• A) Wage inflation.
• B) purchasing power parity (PPP) exchange rate .
• C) Price inflation.
• D) Gross domestic product (GDP) per capita .

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Definitions:

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The ability to understand and share the feelings of another person from their perspective.

Stimulation

The activity of encouraging or arousing interest or enthusiasm in a person or bodily organ.

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The act of dividing and distributing resources or experiences among individuals or groups.

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The practice of taking someone else's work or ideas and passing them off as one's own.