Question

Why is using per capita income for international comparisons sometimes misleading?

• A. It does not consider the level of education within a country.
• B. It does not account for the purchasing power of the currency.
• C. It fails to reflect the distribution of income within a country.
• D. It overlooks the impact of foreign aid on a nation's economy.

Answer 1

Answer:

B. It does not account for the purchasing power of the currency.

• Per capita income does not adjust for the fact that a dollar in one country may buy significantly more or fewer goods and services than a dollar in another country.