Answered: Why is per-capita income NOT always the…

Why is per-capita income NOT always the best indicator of an emerging market's potential? What does the concept of purchasing power parity (PPP) suggest?

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter17: Institutions, Policies, And Cross-country Differences In Income And Growth

Section: Chapter Questions

Problem 13CQ

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Question

Why is per-capita income NOT always the best indicator of an emerging market's potential? What does the concept of purchasing power parity (PPP) suggest?

Definition Definition Value of one unit of currency in terms of goods and services. Purchasing power refers to the ability of money to purchase goods and services at a particular point of time. As price levels in the economy increase, the purchasing power of one unit of currency decreases and vice versa.

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