The Big Mac Index! We discussed the concept of Purchasing Power Parity (PPP) in class. Thisused the prices of representative bundles of goods to convert GDP and GDP per capitavalues from local currencies to dollars. The Economist magazine began the practice of usingthe prices of Big Mac's to make the conversion. You are going to do this now! Here is someevidence from the year 2007 (US GDP reported in trillions of US dollars. China GDP reportedin trillions of Chinese Yuan.):GDPBig Mac PriceUS14.5$4.07China2014.70 CNY(a) Suppose China used all its GDP to buy Big Macs (in China). How many big macs could theypurchase (report your answer in trillions of big macs)?Round your finalanswer to one decimal place.(b) Using your answer from Part (a), compute the US dollar value of these big macs in the U.S. (b) Using your answer from Part (a), compute the US dollar value of these big macs in the U.S.(Your answer should be $4.07 x your answer from Part (a).) Round yourfinal answer to one decimal place.(c) Notice, what we have done is computed the following.Big Mac Adjusted, US Dollar Value of Chinese GDP =USD Price of Big MacChina GDP in Chinese Yuan *CNY Price of Big MacUsing this formula, compute the 2016 Big Mac Adjusted value of China's GDP using thefollowing data (US GDP reported in trillions of US dollars. China GDP reported in trillions ofChinese Yuan.)..Round your final answer to one decimal place.GDPBig Mac PriceUS18.5$5.06China7520.40 CNY

The Big Mac Index! We discussed the concept of Purchasing Power Parity (PPP) in class. This used the prices of representative bundles of goods to convert GDP and GDP per capita values from local currencies to dollars. The Economist magazine began the practice of using the prices of Big Mac's to make the conversion. You are going to do this now! Here is some evidence from the year 2007 (US GDP reported in trillions of US dollars. China GDP reported in trillions of Chinese Yuan.): GDP Big Mac Price US 14.5 $4.07 China 20 14.70 CNY (a) Suppose China used all its GDP to buy Big Macs (in China). How many big macs could they purchase (report your answer in trillions of big macs)? Round your final answer to one decimal place,

The Big Mac Index! We discussed the concept of Purchasing Power Parity (PPP) in class. This used the prices of representative bundles of goods to convert GDP and GDP per capita values from local currencies to dollars. The Economist magazine began the practice of using the prices of Big Mac's to make the conversion. You are going to do this now! Here is some evidence from the year 2007 (US GDP reported in trillions of US dollars. China GDP reported in trillions of Chinese Yuan.): GDP Big Mac Price US 14.5 $4.07 China 20 14.70 CNY (a) Suppose China used all its GDP to buy Big Macs (in China). How many big macs could they purchase (report your answer in trillions of big macs)? Round your final answer to one decimal place,

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter19: The Macroeconomic Perspective

Section: Chapter Questions

Problem 13RQ: Would you usually expect GDP as measured by what is demanded to be greater than GDP measured by what...

See similar textbooks

Related questions

Q: The following table shows real GDP for both the United States and China, in billions of 2009…

A: (a)According to the Real GDP data in United State and China during 2014, United State has higher…

Q: Is it reasonable or does it make sense, that while US exports are added to GDP, US imports are…

A: The question is asking about the logic behind the treatment of exports and imports in the…

Q: Explain the two main difficulties that arise in comparing the GDP of different countries. Which…

A: There are three manners by which this action can be evaluated, income, consumption, and worth…

Q: Consider a country in which three goods (A, B, and C) are produced. The following table shows data…

A: The GDP deflator is a measure of the overall price level of goods and services produced within an…

Q: Why do we subtract import spending from total expenditures while calculating the GDP?

A: Imports are the goods and services that are bought from the rest of the countries to our country.…

Q: Answer the following questions from the given Table below which contains data for Saudi Arabia for…

A: Under the expenditure approach, the sum of amount spent by the household sector, business sector,…

Q: The participation of women in the Gambian labor force has risen dramatically since 2000. How do you…

A: 1. The participation of women in the Gambian labor force has risen dramatically since 2000 which…

Q: han it was 60 years ago. What does this tell us about the well-being of U.S. residents?

A: Gross Domestic Product is considered to be a good and reasonable measure for measuring the well…

Q: Considering the strengths and weaknesses of GDP as a measure of a nations "well-being," how do you…

A: GDP of a country estimates all the transactions within the boundary of a country. It is considered…

Q: Answer the following questions from the given Table below which contains data for Saudi Arabia for…

A: Investment refers to the expenditure incurred on the capital formation in the economy by the private…

Q: Real GDP (2009) Population (2009) Real GDP (2010) Population (2010) Hastinapur $12,256,000 16,000…

A: Real GDP, a measure of GDP that has been adjusted for the level of prices, is how we take this into…

Q: There are two economies: Mexico and the United States. On year 1, the Mexican economy produced $3000…

A: Production is the method of creating goods and services in an economy. It encompasses any economic…

Question

The Big Mac Index! We discussed the concept of Purchasing Power Parity (PPP) in class. This
used the prices of representative bundles of goods to convert GDP and GDP per capita
values from local currencies to dollars. The Economist magazine began the practice of using
the prices of Big Mac's to make the conversion. You are going to do this now! Here is some
evidence from the year 2007 (US GDP reported in trillions of US dollars. China GDP reported
in trillions of Chinese Yuan.):
GDP
Big Mac Price
US
14.5
$4.07
China
20
14.70 CNY
(a) Suppose China used all its GDP to buy Big Macs (in China). How many big macs could they
purchase (report your answer in trillions of big macs)?
Round your final
answer to one decimal place.
(b) Using your answer from Part (a), compute the US dollar value of these big macs in the U.S.

(b) Using your answer from Part (a), compute the US dollar value of these big macs in the U.S.
(Your answer should be $4.07 x your answer from Part (a).) Round your
final answer to one decimal place.
(c) Notice, what we have done is computed the following.
Big Mac Adjusted, US Dollar Value of Chinese GDP =
USD Price of Big Mac
China GDP in Chinese Yuan *
CNY Price of Big Mac
Using this formula, compute the 2016 Big Mac Adjusted value of China's GDP using the
following data (US GDP reported in trillions of US dollars. China GDP reported in trillions of
Chinese Yuan.)..
Round your final answer to one decimal place.
GDP
Big Mac Price
US
18.5
$5.06
China
75
20.40 CNY

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Cross country comparisons of GDP per capita typically use purchasing power parity equivalent exchange rates, which are a measure of the long run equilibrium value of an exchange rate. In fact, we used PPP equivalent exchange rates in this module. Why could using market exchange rates, which sometimes change dramatically in a short period of time, be misleading?
The Czech Republic has 3 GDP of 1,800 billion koruny. The exchange rate is 25 koruny/U.S. dollar. The Czech population is 20 million. What is the GDP per capita of the Czech Republic expressed in U.S. dollars?
List some of the reasons why economists should not consider GDP an effective measure of the standard of living in a county.
In 1980, Denmark had a GDP of 70 billion (measured in U.S. dollars} and a population of 5.1 million. In 2000, Denmark had 3 GDP of 160 billion (measured in U.S. dollars} and a population of 5.3 million. By what percentage did Denmarks GDP per capita rise between 1980 and 2000?