Given the information in the table below, what is country B's real aggregate product in A$ 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 B$ into the real aggregate product in B$ using the correct general price index; and step 3, transform the real aggregate product in B$ into the real aggregate product in A$ using the correct exchange rate (and pay attention that exchanges rates are B$/A$, so you may need to use division or multiplication). Year 1 Country A's nominal aggregate product in the local currency A$. Country A's general price index. Country B's nominal aggregate product in the local currency B$. Country B's general price index. Market exchange rate (B$/A$). PPP exchange rate (B$/A$). A$1000 1.000 B$2160 0.500 1.00 1.50 O a. A$1800, A$1440 and A$1215. O b. A$2250, A$2160 and A$2025. O c. A$4860, A$4666 and A$4374. O d. None of the alternatives is correct. O e. A$1500, A$1440 and A$1350. Year 2 A$1500 1.250 B$2592 0.625 1.20 1.80 Year 3 A$1800 1.200 B$3888 1.000 1.35 2.00
Given the information in the table below, what is country B's real aggregate product in A$ 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 B$ into the real aggregate product in B$ using the correct general price index; and step 3, transform the real aggregate product in B$ into the real aggregate product in A$ using the correct exchange rate (and pay attention that exchanges rates are B$/A$, so you may need to use division or multiplication). Year 1 Country A's nominal aggregate product in the local currency A$. Country A's general price index. Country B's nominal aggregate product in the local currency B$. Country B's general price index. Market exchange rate (B$/A$). PPP exchange rate (B$/A$). A$1000 1.000 B$2160 0.500 1.00 1.50 O a. A$1800, A$1440 and A$1215. O b. A$2250, A$2160 and A$2025. O c. A$4860, A$4666 and A$4374. O d. None of the alternatives is correct. O e. A$1500, A$1440 and A$1350. Year 2 A$1500 1.250 B$2592 0.625 1.20 1.80 Year 3 A$1800 1.200 B$3888 1.000 1.35 2.00
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![Given the information in the table below, what is country B's real aggregate product in A$ 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 B$ into the real aggregate product in B$
using the correct general price index; and step 3, transform the real aggregate product in B$ into the real
aggregate product in A$ using the correct exchange rate (and pay attention that exchanges rates are B$/A$, so
you may need to use division or multiplication).
Year 1
Country A's nominal aggregate
product in the local currency A$.
Country A's general price index.
Country B's nominal aggregate
product in the local currency B$.
Country B's general price index.
Market exchange rate (B$/A$).
PPP exchange rate (B$/A$).
A$1000
Chook
1.000
B$2160
0.500
1.00
1.50
O a. A$1800, A$1440 and A$1215.
O b. A$2250, A$2160 and A$2025.
O c. A$4860, A$4666 and A$4374.
O d. None of the alternatives is correct.
e. A$1500, A$1440 and A$1350.
Year 2
A$1500
1.250
B$2592
0.625
1.20
1.80
Year 3
A$1800
1.200
B$3888
1.000
1.35
2.00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9130e6b9-5520-4d2b-ae36-05f662d9d7c7%2Fc078eeea-296f-40ae-b6a0-50cae319b039%2Fq5ip3ta_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Given the information in the table below, what is country B's real aggregate product in A$ 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 B$ into the real aggregate product in B$
using the correct general price index; and step 3, transform the real aggregate product in B$ into the real
aggregate product in A$ using the correct exchange rate (and pay attention that exchanges rates are B$/A$, so
you may need to use division or multiplication).
Year 1
Country A's nominal aggregate
product in the local currency A$.
Country A's general price index.
Country B's nominal aggregate
product in the local currency B$.
Country B's general price index.
Market exchange rate (B$/A$).
PPP exchange rate (B$/A$).
A$1000
Chook
1.000
B$2160
0.500
1.00
1.50
O a. A$1800, A$1440 and A$1215.
O b. A$2250, A$2160 and A$2025.
O c. A$4860, A$4666 and A$4374.
O d. None of the alternatives is correct.
e. A$1500, A$1440 and A$1350.
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
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education