Indian GDP in 2014 was 119 trillion rupees,while U.S. GDP was $16.5 trillion. The exchange rate in

Question:

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 real GDP in India 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...

Fantastic news! We've Found the answer you've been seeking!