An Interesting Conclusion from Many Studies of International Price Differences

question 130

Multiple Choice

An interesting conclusion from many studies of international price differences is that:

• A) prices tend in general to be higher in low-income nations, causing steep declines in their standards of living.
• B) on average, prices of traded goods in low-income nations are lower and, therefore, their overall price levels are lower.
• C) on average, prices of nontraded goods in low-income nations are lower, but the prices on traded goods are higher and, therefore, their overall price level is not affected.
• D) price differences tend to be larger, depending on whether the central bank pegs the nation's currency to the U.S. dollar or the Japanese yen.

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Definitions:

Acquiring Resources

The process of obtaining necessary materials, capital, personnel, or other assets required to undertake a project or run a business.

Sweatshop

A place of employment that has poor, socially unacceptable working conditions, often with unreasonably low wages.

Working Conditions

Refers to the environment, hours, and policies under which employees operate.

High Wages

Compensation that is significantly above the average pay rate for a particular job or industry, often reflecting high skill levels, performance, or the critical nature of the job.