The local currency in Peru is the Peruvian Nuevo Sol (PNS). In 2020, the official exchange rate between the PNS and the USD was 3 (i.e., 3 PNS = 1USD). Table 1 gives local currency prices of three goods in Peru and the United States. Table 1 also gives the expenditure shares of each good (i.e., what fraction of total expenditures do people spend on each good). Table 1. Local Prices & Expenditure Shares in Peru and the U.S. Prices in Local Currencies U.S. 2 USD Item Expenditure Share Peru 6 PNS Corn (1 kg) T-Shirts (1 shirt) Rent (2 bedroom apartment) 0.3 45 PNS 1,000 PNS 0.2 15 USD 0.5 1,000 USD 5. Calculate and report the Purchasing Power Parity (PPP) exchange rate between the PNS and the USD. PPP Exchange Rate:

The local currency in Peru is the Peruvian Nuevo Sol (PNS). In 2020, the official exchange rate between the PNS and the USD was 3 (i.e., 3 PNS = 1USD). Table 1 gives local currency prices of three goods in Peru and the United States. Table 1 also gives the expenditure shares of each good (i.e., what fraction of total expenditures do people spend on each good). Table 1. Local Prices & Expenditure Shares in Peru and the U.S. Prices in Local Currencies U.S. 2 USD Item Expenditure Share Peru 6 PNS Corn (1 kg) T-Shirts (1 shirt) Rent (2 bedroom apartment) 0.3 45 PNS 1,000 PNS 0.2 15 USD 0.5 1,000 USD 5. Calculate and report the Purchasing Power Parity (PPP) exchange rate between the PNS and the USD. PPP Exchange Rate:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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