Final answer:
Cross country comparisons of GDP per capita typically use purchasing power parity equivalent exchange rates to avoid misleading comparisons caused by market exchange rates.
Step-by-step explanation:
Cross country comparisons of GDP per capita typically use purchasing power parity equivalent exchange rates, which are a measure of the long run equilibrium value of an exchange rate. This is because market exchange rates can change dramatically in a short period of time, leading to misleading comparisons. Let's consider an example:
- Step 1: Determine the exchange rate for the specified year. In 2012, the exchange rate was 1.869 reals per dollar.
- Step 2: Convert Brazil's GDP into U.S. dollars by multiplying the GDP in reals by the exchange rate.
By using purchasing power parity equivalent exchange rates, we can make more accurate comparisons of GDP per capita across countries over time.