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).
Given the information in the table below, what is country A's real aggregate product in B$ at constant
|
|
Year 1 |
Year 2 |
Year 3 |
|
Country A’s nominal aggregate product in the local currency A$. |
A$1000 |
A$1500 |
A$1800 |
|
Country A’s general price index. |
1.000 |
1.250 |
1.200 |
|
Country B’s nominal aggregate product in the local currency B$. |
B$2160 |
B$2592 |
B$3888 |
|
Country B’s general price index. |
0.500 |
0.625 |
1.000 |
|
Market exchange rate (B$/A$). |
1.00 |
1.20 |
1.35 |
|
PPP exchange rate (B$/A$). |
1.50 |
1.80 |
2.00 |
a.
B$1500, B$1800 and B$2250.
b.
B$2250, B$2700 and B$3375.
c.
B$1875, B$2700 and B$3750.
d.
None of the alternatives is correct.
e.
B$694, B$833 and B$1042.
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