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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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