Question

The Purchasing Power Parity (PPP) is a better measure of real living standards as compared to Per Capita Income (PCI) across countries because:

• A. PPP takes into account the health and education of the country.
• B. PPP takes into account the real exchange rate between countries while comparing income and living standards.
• C. PPP and PCI are same and hence there is no difference.
• D. PPP looks more into income distribution than PCI.

Hint:

Remember: \[ \boxed{ \text{Nominal Income} \neq \text{PPP Income} } \] PPP adjusts income for differences in price levels across countries, making comparisons of living standards more accurate.

Answer 1

The Correct Option is B