Macroeconomics (Fourth Edition)
Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Chapter 2, Problem 7E

(a)

To determine

Determine the ratio of Indian GDP to US GDP.

(b)

To determine

Determine the ratio of real GDP.

(c)

To determine

Explain the difference between two numbers.

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India has a GDP of 23,000 billion Indian rupees, and a population of 1.1 billion. The exchange rate is 50 rupees per U.S. dollar. Calculate the GDP per capita of India as measured in U.S. dollars.
The following table shows the nominal and real exchange rates for two countries and two years (OECD, 2020a,b). The column names are the country codes (not the currency codes) and the exchange rates are expressed as the amount of the currency per unit of US dollar. Nominal Real Year FRA NZL FRA NZL 1996 0.7799 1.4548 0.7934 0.9916 2018 0.8468 1.4453 1.1195 0.9968 d. For each countries and each year, what is the ratio P" /P, where Pis the price level in the country and P" is the price level in the United States. Round your answer to the nearest fourth decimal. Year FRA NZL Number 1996 Number 2018 Number Number e. Answer this question for FRA. If we believe in the theory of purchasing power parity, what is likely to happen after 2018? i. Indicate whether the currency of FRA will appreciate, depreciate, or remain unchanged, against the US dollar in nominal term. Appreciate Depreciate Remain unchanged l. Indicate whether the currency of FRA will appreciate, depreciate, or remain unchanged,…
On June 1, 2016, the exchange rate for U.S. dollars and euros was approximately $1.00 = €0.90, as shown in the market for U.S. dollars below. Suppose the interest rate is expected to fall in the European Union (relative to the interest rate in the U.S.). How will this affect the value of the dollar relative to the euro? Exchange Rate (€/S) 0.9 Quantity of Dollars Traded. D₁ S₁
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