Finding out ratio of gdp per capita

Assignment Help Macroeconomics

Reference no: EM1314522

Suppose that the only traded good is bicycles and the only non-graded good is visits to the doctor. The following table shows the information on production and prices for bicycles and doctor\'s visits for two countries, USF and FSU.

	Bicycles produced per capita	Visits produced per capita	Price of bicycles in local currency	Price of vists in local currency
USF	8	4	2	3
FSU	4	2	1.5	1

1. Calculate the level of GDP per capita in each country measured in local currency.

2. Calculate the marker exchange rate between the currencies of the two countries.

3. What is the ratio of GDP per capita in USF to GDP per capita in FSU using the market exchange rate?

4. Calculate the purchasing power parity exchange rate between the two currencies.

5. What is the ratio of GDP per capita in USF to GDP per capita in FSU using the purchasing power parity exchange rate?

Reference no: EM1314522

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