EC304 tutorial 2

Styles Employment (millions) 1.0 1.25 0.75 Aggregate Output . . .. . . .. . ... Market Price (NZD per unit) 4.00 2.50 0.80 Value of Output (NZD) - . .. . . .. . . .. . . ......... The market exchange rate is 1.75 PGK per NZD. Papua New Guinea's total population is 7 million while Ne Zealand's is 4 million (including dependents). (a) After filling in the blank spaces, calculate each country's annual GDP and annual GDP per capita in unit of its own currency. (b) As measured by exchange rates, what is the relative size of New Zealand's GDP per capita compared to Papua New Guinea's? (Hint: First, compute any of the country's GDP in terms of another dollar using the exchange rate) (c) Calculate the purchasing power parity (PPP) measure of PNG's GDP per-capita in NZD using prices that prevail in New Zealand. Re-compute the relative size of the two economies using the PPP comparisons. (Hint Use the PPP method (d) Discuss the difference between the exchange rate based conversion and the PPP conversion. 2) China's GDP increased from $997.5 billion in 1999 to $1,076.9 billion in 2000. Calculate the growth rate of China's GDP in 2000 (this data is from http://www.worldbank.org). 3) India's real GDP per capita (PPP) grew at an average annual rate of 2.00% from 1960 through 1996, increasing from $769 to $1.546, Assuming India's GDP per capita continues growing at this average rate 25 C