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Chapter 2, Question 6 in Macroeconomics 3rd edition--Charles Jones

What is the ratio of Indian GDP to U.S. GDP if we don't take into account the differences in relative prices and simply use the exchange rate to make the conversion?

What is the ratio of real GDP in India to real GDP in the US in common prices?

Why are those two numbers different?

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Darryn D'Souza
Darryn D'SouzaLv10
28 Sep 2019

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Related questions

How large is the economy of India? Indian GDP in 2010 was 78.9 trillion rupees, while U.S. GDP was $14.5 trillion. The exchange rate in 2010 was 45.7 rupees per dollar. India turns out to have lower prices than the United States (this is true more generally for poor countries): the price level in India (converted to dollars) divided by the price level in the United States was 0.368 in 2010.

a) What is the ratio of Indian GDP to U.S. GDP if we don't take into account the differences in relative prices and simply use the exchange rate to make the conversion?

b) What is the ratio of real GDP in India to real GDP in the United States in common prices?

c) Why are these two numbers so different?

6. How large is the economy of India?

Indian GDP in 2010 was 78.9 trillion rupees, while U.S. GDP was $14.5 trillion. The exchange rate in 2010 was 45.7 rupees per dollar. India turns out to have lower prices than the United States (this is true more generally for poor countries): the price level in India (converted to dollars) divided by the price level in the United States was 0.368 in 2010.

a) What is the ratio of Indian GDP to U.S. GDP if we don't take into account the differences in relative prices and simply use the exchange rate to make the conversion?

b) What is the ratio of real GDP in India to real GDP in the United States in common prices?

c) Why are these two numbers different?

Indian GDP in 2014 was 119 trillion rupees, while U.S. GDP was $16.5 trillion. The exchange rate in 2014 was 61.0 rupees per dollar. India turns out to have lower prices than the United States (this is true more generally for poor countries): the price level in India (converted to dollars) divided by the price level in the UNited States was 0.280 in 2014.

a) What is the ratio of Indian GDP to U.S. GDP if we don't take into account the differences in relative prices and simply use the exchange rate to make the conversion?

b) What is the ratio of ral GDP in India to real GDP in the United States in common prices?

c) Why are these two numbers different?

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