Discuss the difference in GDP per capita using the two different exchange rates. Which one is larger? Why?Peru’s GDP per capita in USD using Official Exchange Rate: USD 6,000Peru’s GDP per capita in USD using PPP Exchange Rate: USD 17,418.23 The local currency in Peru is the Peruvian Nuevo Sol (PNS). In 2020, the official exchange rate betweenthe PNS and the USD was 3 (i.e., 3 PNS = 1USD). Table 1 gives local currency prices of three goods inPeru and the United States. Table 1 also gives the expenditure shares of each good (i.e., what fraction oftotal expenditures do people spend on each good).Table 1. Local Prices & Expenditure Shares in Peru and the U.S.Prices in Local CurrenciesItemExpenditure SharePeruU.S.Corn (1 kg)T-Shirts (1 shirt)Rent (2 bedroom apartment)0.36 PNS2 USD0.245 PNS15 USD0.51,000 PNS1,000 USD

GDP is the total value of goods and services that are produced in the country.

iscuss the difference in GDP per capita using the two different exchange rates. Which one is larger? Why? Peru’s GDP per capita in USD using Official Exchange Rate: USD 6,000 Peru’s GDP per capita in USD using PPP Exchange Rate: USD 17,418.23

iscuss the difference in GDP per capita using the two different exchange rates. Which one is larger? Why? Peru’s GDP per capita in USD using Official Exchange Rate: USD 6,000 Peru’s GDP per capita in USD using PPP Exchange Rate: USD 17,418.23

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 5PA

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