If a country wanted to increase their GDB tenfold, could it just increase salaries by ten, force companies to pay ten times more and spend 10 times more in every field as well ? So that everything is increased proportionally, thus making the GDP grow.

Question

If a country wanted to increase their GDB tenfold, could it just increase salaries by ten, force companies to pay ten times more and spend 10 times more in every field as well ? So that everything is increased proportionally, thus making the GDP grow.

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Answer 1

No, because that would cause the exchange rate to go up 10x, and the real purchasing power wouldn’t change. This sort of thing is why PPP was invented, to account for currency fluctuations and cost of living.