Why is it important to calculate purchasing power parity in the global market?
A) It indicates how much consumers will pay for goods and services.
B) It determines interest rates on short-term debt.
C) It identifies how much the nominal GDP should be adjusted.
D) It determines standards of living across the globe.
E) It indicates the level of disposable income in developed nations.
Answer: D
Explanation: D) Purchasing power parity gives us a much better idea of what people can actually buy with the financial resources allocated to them by their respective economic systems. In other words, it gives us a better sense of standards of living across the globe.
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