Answer to Question 1
Answer: A
Answer to Question 2
Answer: This method seeks to equalize purchasing power across countries. The basic method is to take the expenses for an employee in his or her home country, including income taxes, housing, goods and services, and discretionary income, and then to estimate how those expenses will vary in the host country. The employer will pay the differences. The base salary will normally be in the same range as the manager's home-country salary. Then, a foreign service premium and/or hardship allowance might be added. There could also be allowances given for housing and education.
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