Japanese GDP in 2010 was 480 trillion yen (U.S. GDP, again, was $14.5 trillion). The exchange rate

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Japanese GDP in 2010 was 480 trillion yen (U.S. GDP, again, was $14.5 trillion). The exchange rate in 2010 was 87.8 yen per dollar. Contrary to China and India, however, Japan had higher prices than the United States: the price level in Japan (converted to dollars) divided by the price level in the United States was 1.243 in 2010.
(a) What is the ratio of Japanese 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 GDP in Japan to real GDP in the United States in common prices?
(c) Why are these two numbers different?
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
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Macroeconomics

ISBN: 978-0393923902

3rd edition

Authors: Charles I. Jones

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