49.6k views
3 votes
The arithmetic average of the current exchange rate and the exchange rates in the two preceding years, adjusted by the ratio of domestic inflation to the combined inflation rates of the euro zone, Japan, the United Kingdom, and the United States, is known as

A. the Gini coefficient.
B. the Markov-Linder formula.
C. the Kolgorov coefficient.
D. the Zurich formula.
E. the Atlas conversion factor.

1 Answer

7 votes

Final answer:

This question pertains to the use of an exchange rate to compare GDP between countries with different currencies. An exchange rate is necessary to serve as a common denominator, with options like market exchange rates or PPP used for such comparisons. The specific term referred to in the question is not recognized among the provided options.

Step-by-step explanation:

The subject of the question involves comparing the gross domestic product (GDP) of different countries which use distinct currencies. This necessitates the use of an exchange rate to convert currencies into a "common denominator." Exchange rates can be expressed in various forms, such as units of one currency needed for a single unit of another or the inverse. These exchange rates can be the market exchange rates, which are subject to daily fluctuations, or purchasing power parity (PPP) equivalent exchange rates, which provide a more stable measure over the long term and are generally used for international comparisons of GDP.

The term described in the student's question appears to refer to a complex conversion factor used in economic analyses and does not correspond to any listed options (A to E). Therefore, without precise information on this specific adjustment factor's proper name or commonplace terminology within the field, providing an accurate definition is not possible. Nevertheless, the student's description resembles something that might be developed to account for differences in inflation and exchange rates over time when analyzing international economic data.

User Olegsv
by
7.7k points