Given the information in the table below, what is country A's real aggregate product in B$ at constant purchasing power of year 2 for years 1, 2, and 3 respectively? Remember: step 1, make sure that the general price index has the correct base year; step 2, transform the nominal aggregate product in A$ into the real aggregate product in A$ using the correct general price index; and step 3, transform the real aggregate product in A$ into the real aggregate product in B$ using the correct exchange rate (and pay attention that exchanges rates are B$/A$, so you may need to use division or multiplication). a. C. Country A's nominal aggregate product in the local currency A$. Country A's general price index. e. Country B's nominal aggregate product in the local currency B$. Country B's general price index. Market exchange rate (B$/A$). B$1500, B$1800 and B$2250. b. B$2250, B$2700 and B$3375. PPP exchange rate (B$/A$). B$1875, B$2700 and B$3750. d. None of the alternatives is correct. B$694, B$833 and B$1042. Year 1 A$1000 1.000 B$2160 0.500 1.00 1.50 Year 2 A$1500 1.250 B$2592 0.625 1.20 1.80 Year 3 A$1800 1.200 B$3888 1.000 1.35 2.00

Given the information in the table below, what is country A's real aggregate product in B$ at constant purchasing power of year 2 for years 1, 2, and 3 respectively? Remember: step 1, make sure that the general price index has the correct base year; step 2, transform the nominal aggregate product in A$ into the real aggregate product in A$ using the correct general price index; and step 3, transform the real aggregate product in A$ into the real aggregate product in B$ using the correct exchange rate (and pay attention that exchanges rates are B$/A$, so you may need to use division or multiplication). a. C. Country A's nominal aggregate product in the local currency A$. Country A's general price index. e. Country B's nominal aggregate product in the local currency B$. Country B's general price index. Market exchange rate (B$/A$). B$1500, B$1800 and B$2250. b. B$2250, B$2700 and B$3375. PPP exchange rate (B$/A$). B$1875, B$2700 and B$3750. d. None of the alternatives is correct. B$694, B$833 and B$1042. Year 1 A$1000 1.000 B$2160 0.500 1.00 1.50 Year 2 A$1500 1.250 B$2592 0.625 1.20 1.80 Year 3 A$1800 1.200 B$3888 1.000 1.35 2.00

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter17: Inflation

Section: Chapter Questions

Problem 5SQP

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