Suppose that every month the average student in Tokyo, Japan, and the average student in Beijing, China,

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Suppose that every month the average student in Tokyo, Japan, and the average student in Beijing, China, consume the following quantities of food and transportation services at the following prices:

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a. Compute the average expenditure of the Japanese student for food and transportation services (in Yen).

b. Compute the average expenditure of the Chinese student for food and transportation services (in Yuan).

c. Suppose that 1 Yuan is worth 17 Yen. Compute the average expenditure of the Chinese student in Yen.

d. Using the purchasing power parity method, compute the average expenditure of the Chinese student in Yen.

e. Compare the standards of living of the Chinese and Japanese students. Which one is lower? What difference does the choice of method make?

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Macroeconomics

ISBN: 9781292160504

7th Global Edition

Authors: Olivier J. Blanchard

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