Question Details

Purchasing power parity prices are used to construct GDP data that 



1) Purchasing power parity prices are used to construct GDP data that 
A) do not omit the underground economy.
B) can be used to make more valid comparisons between one country and another.
C) is a proper measure of economic welfare.
D) adjust for differences in population.
2) If we compare the U.S. GDP and the Chinese GDP,
A) real GDP per person is about the same in the two countries.
B) U.S. real GDP per person is less than Chinaʹs real GDP per person once we adjust for
currency differences.
C) Chinaʹs real GDP per person is less than real GDP per person in the United States.
D) real U.S. GDP per person was much larger than Chinaʹs real GDP per person when
purchasing power parity prices are used but is less than Chinaʹs real GDP per person
when exchange rate prices are used.

3) The use of purchasing power parity prices
A) decreases the real GDP per person statistics published by the International Monetary
Fund.
B) weakens the validity of cross country comparisons of economic welfare.
C) increases the amount by which U.S. GDP is larger than that of any other nation.
D) accounts for differences in the prices of the same goods in different countries when
measuring real GDP.
4) Pollution is a by-product of some production processes, so on this count real GDP as measured
A) is adjusted downward to take into account the pollution.
B) is adjusted upward to take into account the expenditures that will be made in the future to
clean up the pollution.
C) tends to overstate economic welfare.
D) tends to understate economic welfare.
5) Which of the following is NOT a reason that real GDP is a poor measure of a nationʹs economic
welfare?
A) Real GDP omits measures of political freedom.
B) Real GDP does not take into account the value of peopleʹs leisure time.
C) Real GDP does not include the underground economy.
D) Real GDP overvalues household production.


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