
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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G, 8
Economics

Transcribed Image Text:In the following diagram, what trend is being explained?
Exchange-rate-deviation index
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
●
●
10
20
30
40
50
60
Real GDP per Capita (U.S. = 100)
70
:
80
90
100

Transcribed Image Text:As countries' per capita incomes increase, the gap between a PPP measure of their GDP and a measure of that same GDP,
using standard exchange rate conversion, becomes smaller, due to their increasingly higher cost of labor.
As countries' per capita incomes increase, the gap between a PPP measure of their GDP and a measure of that same GDP,
b) using standard exchange rate conversion, becomes smaller, due to their increasingly higher cost of capital.
As countries' per capita incomes increase, the gap between a PPP measure of their GDP and a measure of that same GDP,
c) using standard exchange rate conversion, becomes smaller, due to their increasingly lower cost of labor.
As countries' per capita incomes increase, the gap between a PPP measure of their GDP and a measure of that same GDP,
d) using standard exchange rate conversion, becomes larger, due to their increasingly lower cost of labor.
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