Relative Buying Power of the Rupiah vs. the Krona (2022)
The 2022 comparison of GDP per capita between Indonesia and Sweden demonstrates that the buying power of the Indonesian rupiah, relative to the Swedish krona, is more than two and a half times greater than the market exchange rate suggests. This discrepancy is revealed by comparing the PPP-adjusted figure (where Indonesia's GDP per capita is 22.7% of Sweden's) with the market exchange rate figure (8.6%).
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In a 2022 economic comparison, Country A's economic output per person was 8.6% of Country B's when measured using market currency exchange rates. However, when a different method was used to adjust for the fact that goods and services have different prices in each country, Country A's output per person was found to be 22.7% of Country B's. Based on this information, what is the most accurate conclusion?
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In a 2022 comparison, Country A's economic output per person was 8.6% of Country B's when measured using market currency exchange rates. However, when adjusted for local price levels, this figure rose to 22.7%. Based on this data, it is reasonable to conclude that a basket of goods and services that are not typically traded internationally (such as a haircut or a local bus ride) is relatively cheaper in Country A than in Country B.
Relative Buying Power of the Rupiah vs. the Krona (2022)
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In 2022, a comparison of average income per person between Indonesia and Sweden showed two different results. When using the daily market currency exchange rate, Indonesia's average income was 8.6% of Sweden's. However, when the comparison was adjusted to account for the actual cost of an identical basket of goods and services in each country, Indonesia's average income was 22.7% of Sweden's. What is the most logical conclusion that can be drawn from this data?
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In 2022, data showed that Indonesia's average income per person was 8.6% of Sweden's when using market currency exchange rates. However, when adjusted for what goods and services that income could actually buy in each country, the figure rose to 22.7%. Based on this information, one can conclude that the market exchange rate overstates the domestic purchasing power of the Indonesian rupiah.
In 2022, a comparison of average income per person showed that Indonesia's was 8.6% of Sweden's when using market currency exchange rates. However, when the comparison was adjusted for the actual cost of goods and services in each country, the figure was 22.7%. Based on these figures, the domestic buying power of the Indonesian rupiah was approximately ____ times greater than the market exchange rate suggested, relative to the Swedish krona. (Round your answer to one decimal place).