"High-income countries have a price level which is much higher than the low-income countries." Which of the following is most likely to explain this price differential?
A. Prices of non-traded goods and services are relatively stable across high- and low-income nations.
B. Traded goods are much more sensitive to the income levels than are non-traded goods and services.
C. With the development process of a nation, its productivity in making traded goods rises much faster than that in making non-traded goods.
D. Labor involved in production of non-traded goods and services in high-income nations receives lower wages than the labor-producing traded goods.
Answer: C
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