The price of a bag of groceries in China and USA are as following: A bag of groc

Question

The price of a bag of groceries in China and USA are as following: A bag of groceries in China 18 eggs: Y5 5 pounds apples: ¥25 12 bottles of sparking water: Y 15 2 gallons of milk: Y20 1 pound of chicken breast: Y10 1 pound of grounded pork: ¥ 10 1 pound of sweet onion: Y3 1 pound of spinach: Y2 A bag of groceries in USA 18 eggs: $2 5 pounds apples: $S 12 bottles of sparking water: $8 2 gallons of milk: $3 l pound of chicken breast: $4 l pound of grounded pork: $5 1 pound of sweet onion: $1 1 pound of spinach: $2 The exchange rate between Chinese Yuan and Japanese Yen is I JPY 0.05982 CNY The exchange rate between Japanese Yen and USD is 1 JPY 0.009129 USD If China GDP/Capita 59,660 CNY, and US GDP/capita 57,467 USD. What is the difference between calculating China GNP/capita using the exchange rate and calculating China GNP/capita using PPP?

Explanation / Answer

Calculation of ChinaGDP per capita using exchange rate takes into consideration all the goods and services that are traded in the market. On the other hand, calculating China GNP per capita using PPP takes into consideration only the basket of goods and services mentioned above. Thus, the exchange rate approach considers goods traded in the market while PPP approach takes into consideration only basket of goods and services.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.