« previous next »

Author Question: What is the limitation of using exchange rate-based measures as indicators of the standard of living ... (Read 52 times)

WhattoUnderstand

  • Hero Member
  • *****
  • Posts: 517
on: Jun 30, 2018
What is the limitation of using exchange rate-based measures as indicators of the standard of living across countries?
 
  What will be an ideal response?

Question 2

Figure 9.1 shows three aggregate demand curves. A movement from curve AD1 to curve AD2 could be caused by a(n)
 
  A) increase in the money supply. B) decrease in government spending.
  C) increase in taxes. D) increase in the price level.


kingfahad97

  • Sr. Member
  • ****
  • Posts: 308
Reply #1 on: Jun 30, 2018
Answer to Question 1

Exchange rates convert currencies into the same units but fail to account for the fact that the prices of many goods and services differ across countries. Fluctuations in exchange rates have little to do with changes in prices in different countries and are unable to account for the differences in cost of living. Therefore, if exchange rates are used to compare the income per capita of different countries, there is a possibility that the income per capita of a country will be overestimated.

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Immunoglobulin injections may give short-term protection against, or reduce severity of certain diseases. They help people who have an inherited problem making their own antibodies, or those who are having certain types of cancer treatments.

Did you know?

As of mid-2016, 18.2 million people were receiving advanced retroviral therapy (ART) worldwide. This represents between 43–50% of the 34–39.8 million people living with HIV.

Did you know?

It is important to read food labels and choose foods with low cholesterol and saturated trans fat. You should limit saturated fat to no higher than 6% of daily calories.

Did you know?

IgA antibodies protect body surfaces exposed to outside foreign substances. IgG antibodies are found in all body fluids. IgM antibodies are the first type of antibody made in response to an infection. IgE antibody levels are often high in people with allergies. IgD antibodies are found in tissues lining the abdomen and chest.

Did you know?

Green tea is able to stop the scent of garlic or onion from causing bad breath.

The theoretical design of nature reserves, based on the tenets of island biogeography. The theoretical design of nature reserves, based on the tenets of island biogeography.
Tiger, the largest and heaviest living species of the cat family Tiger, the largest and heaviest living species of the cat family
These older adults are participating in an exercise class at their assisted-living facility These older adults are participating in an exercise class at their assisted-living facility
Acceptable ranges of heart rate Acceptable ranges of heart rate
Effect of Increasing the Investment Rate on the Steady State Effect of Increasing the Investment Rate on the Steady State
Cladogram Based On DNA Sequence Cladogram Based On DNA Sequence
Video: Carbohydrate Metabolism: Introduction to renal processes and filtrate formation and composition

For a complete list of videos, visit our video library