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- Which of the following is correct? Exchange-rate-based measures of income per capita are identical to PPP-based measures. PPP rate-based measures of income are generated by the market. The gap between the income per capita of the U.S. and the income per capita of poorer countries is smaller when PPP-based measures are used. The gap between the income per capita of the U.S. and the income per capita of poorer countries is smaller when exchange rate-based measures are used. Suppose the GDP growth resulting from physical capital in an economy is 1%, and the growth resulting from human capital is 2%. If the annual growth rate of GDP is 5%, the growth resulting from technology equals: 1% 2% 3% 4% Net investment is equal to: The change in the stock of capital Gross investment plus depreciation Replacement investment The change in the capital stock plus depreciation. Which of the following is the most critical factor contributing to poverty reduction across the world?…arrow_forwardWhat is the per capita real GDP on Purchasing Power Parity basis in Sri Lanka? What is the trend in this variable? Is the per capita real GDP increasing? Can you find the relevant data for the last couple of years or more?arrow_forwardCalculate the trade-to-GDP ratio for a country that has a 5 percent growth rate, $600 million in exports, $400 million in imports, and gross domestic product (GDP) of $2,000 million.arrow_forward
- India has a GDP of 23,000 billion Indian rupees, and a population of 1.1 billion. The exchange rate is 50 rupees per U.S. dollar. Calculate the GDP per capita of India as measured in U.S. dollars.arrow_forwardConsider the following open economy. Real GDP 1,000 Consumption 774 Government Expenditures 197 Investment 282 Exports 13 Taxes 185 Transfers 88 If the economy invested 10 of its savings abroad, how much savings did it receive from abroad? Do not write the dollar ($) sign, and use a minus (-) in front of a decrease. Round your answer at one (1) decimal if necessary.arrow_forwardDiscuss the difference in GDP per capita using the two different exchange rates. Which one is larger? Why? Peru’s GDP per capita in USD using Official Exchange Rate: USD 6,000Peru’s GDP per capita in USD using PPP Exchange Rate: USD 17,418.23arrow_forward
- Q4. Suppose that Brazil initially has a higher capital rental rate (r) than the United States. What would be the direction of foreign direct investment (FDI)? Use a world-capital-market graph to show the effects of FDI on the two countries’ rental rates of capital, GDP, and return to labor owners. Identify the net change in world output in the above graph. Discussion: what other effects could FDI cause in the recipient and source countries that are not captured in the model? Your answerarrow_forwardQuestion 25 (1 paint) If the catch-up effect is universal, i.e. the poorer countries grow faster. Given enough time, what would happen to the international income differences? The catch-up effect does not do anything to the international income differences. They would remain the same because income in both the rich and poor countries would grow over time. They would increase because the rich countries would continue to get richer. They would disappear.arrow_forwardWhy is GDP and GNP converted to US dollararrow_forward
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