The local currency in Peru is the Peruvian Nuevo Sol (PNS). In 2020, the official exchange rate betweenthe PNS and the USD was 3 (i.e., 3 PNS = 1USD). Table 1 gives local currency prices of three goods inPeru and the United States. Table 1 also gives the expenditure shares of each good (i.e., what fraction oftotal expenditures do people spend on each good).Table 1. Local Prices & Expenditure Shares in Peru and the U.S.ItemExpenditure SharePrices in Local CurrenciesPeruU.S.Corn (1 kg)T-Shirts (1 shirt)Rent (2 bedroom apartment)0.36 PNS2 USD0.245 PNS15 USD0.51,000 PNS1,000 USD6. Calculate and report the Purchasing Power Parity (PPP) exchange rate between the PNS and the USD.PPP Exchange Rate:7. Peru's GDP per capita in 2020 was 18,000 PNS. Calculate and report Peru's GDP per capita in USDusing the Official Versus PPP exchange rates.Peru's GDP per capita in USD using Official Exchange Rate:Peru's GDP per capita in USD using PPP Exchange Rate:8. Use the space below to discuss the difference in GDP per capita using the two different exchange rates.Which one is larger? Why?

PPP exchange rate is the value of the currency in the domestic market that is converted into the…

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). Item Table 1. Local Prices & Expenditure Shares in Peru and the U.S. Expenditure Share Prices in Local Currencies Corn (1 kg) T-Shirts (1 shirt) Rent (2 bedroom apartment) 0.3 0.2 0.5 PPP Exchange Rate: Peru 6 PNS 45 PNS 1,000 PNS U.S. 2 USD 6. Calculate and report the Purchasing Power Parity (PPP) exchange rate between the PNS and the USD. 15 USD 1,000 USD Peru's GDP per capita in USD using PPP Exchange Rate: 7. Peru's GDP per capita in 2020 was 18,000 PNS. Calculate and report Peru's GDP per capita in USD using the Official Versus PPP exchange rates. Peru's GDP per capita in USD using Official Exchange Rate: 8. Use the space below to discuss the difference in GDP per capita using the two different exchange rates. Which one is larger? Why?

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). Item Table 1. Local Prices & Expenditure Shares in Peru and the U.S. Expenditure Share Prices in Local Currencies Corn (1 kg) T-Shirts (1 shirt) Rent (2 bedroom apartment) 0.3 0.2 0.5 PPP Exchange Rate: Peru 6 PNS 45 PNS 1,000 PNS U.S. 2 USD 6. Calculate and report the Purchasing Power Parity (PPP) exchange rate between the PNS and the USD. 15 USD 1,000 USD Peru's GDP per capita in USD using PPP Exchange Rate: 7. Peru's GDP per capita in 2020 was 18,000 PNS. Calculate and report Peru's GDP per capita in USD using the Official Versus PPP exchange rates. Peru's GDP per capita in USD using Official Exchange Rate: 8. Use the space below to discuss the difference in GDP per capita using the two different exchange rates. Which one is larger? Why?

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 5PA

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