10. We saw in class that PPP conversion factors are different from market exchange rates because theyare based on the actual purchasing powers of currencies. The table below shows the GDP of differentcountries in their local currency along with their GDP at the market exchange rate, population, and thePPP conversion factor.countryGDP in 2017GDP (US$s, at market ex.) PPP factorpopulationJapan544¥ trillion$4.86 trillion105 ¥/$127.5 millionIndia1713 trillion$2.65 trillion20 3/$1339 million|Мexico22 trillion pesos$1.16 trillion11 pesos/$129 millionWhich country has the higher GDP per capita measured in purchasing power, India or Mexico?a. Mexico's average income is more than double India'sb. India's average income is more than double Mexico'sc. Mexico and India have similar average incomesd. not enough information is provided

PPP is the purchasing power parity that measures the purchasing power of one currency in terms of…

Which country has the higher GDP per capita measured in purchasing power, India or Mexico? a. Mexico's average income is more than double India's b. India's average income is more than double Mexico's c. Mexico and India have similar average incomes d. not enough information is provided

Which country has the higher GDP per capita measured in purchasing power, India or Mexico? a. Mexico's average income is more than double India's b. India's average income is more than double Mexico's c. Mexico and India have similar average incomes d. not enough information is provided

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 14SCQ: If domestic Investment increases, and there is no change in the amount of private and public saving,...

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We saw in class that PPP conversion factors are different from market exchange rates because they are based on the actual purchasing powers of currencies. The table below shows the GDP of different countries in their local currency along with their GDP at the market exchange rate, population, and the PPP conversion factor. country GDP in 2017 GDP (US$s, at market ex.) PPP factor роpulation Japan 544¥ trillion $4.86 trillion 105 ¥/$ 127.5 million India 1717 trillion $2.65 trillion 20 7/$ 1339 million |Мexico 22 trillion pesos $1.16 trillion 11 pesos/$ 129 million Which country has the higher GDP per capita measured in purchasing power, India or Mexico? Mexico's average income is more than double India's India's average income is more than double Mexico's Mexico and India have similar average incomes not enough information is provided
If domestic Investment increases, and there is no change in the amount of private and public saving, what must happen to the size of the trade deficit?
If a country is running a government budget surplus, why is (T - G) on the left side of the saving-investment identity?
In what way does comparing a countrys exports to GDP reflect its degree of globalization?
Imagine that the economy of Germany finds itself in the following situation: the government budget has a surplus of 1 of Germanys GDP; private savings is 20 of GDP; and physical investment is 18 of GDP. Based on the national saving and investment identity, what is the current account balance? If the government budget surplus falls to zero, how will this affect the current account balance?
Table 23.7 provides some hypothetical data on macroeconomic accounts for three countries represented by A. B, and C and measured in billions of currency units. In Table 23.7, private household saving is SH, tax revenue is T, government spending is G, and investment spending is Calculate the trade balance and the net inflow of foreign saving for each country. State whether each one has a trade surplus or deficit (or balanced trade). State whether each is a net lender or borrower internationally and explain.
Explain briefly whether each of the following would be more likely to lead to a higher level of trade for an economy, or a greater imbalance of trade for an economy. Living In an especially large country Having a domestic investment rate much higher than the domestic savings rate Having many other large economies geographically nearby Having an especially large budget deficit Having countries with a tradition of strong protectionist legislation shutting out imports
Occasionally, a government official will argue that a country should strive for both a trade surplus and a healthy inflow of capital from abroad. Is this possible?
If imports exceed exports, is it a trade deficit or a trade surplus? What about if exports exceed imports?
Suppose we extend the circular flow model to add imports and exports. Copy the circular flow diagram onto a sheet of paper and then add a foreign county as a third agent. Draw a rough sketch of the flows of imports, exports, and the payment for each on your diagram.
Does a higher rate of return in a nations economy, all other things being equal, affect the exchange rate of its currency? If so, how?
Imagine that the U.S. economy finds itself in the following situation: a government budget deficit of 100 billion, total domestic savings of 1,500 billion, and total domestic physical capital investment of 1,600 billion. According to the national saving and Investment Identity, what will be the current account balance? What will be the current account balance if Investment rises by 50 billion, while the budget deficit and national savings remain the same?