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Unformatted text preview: and exports 40 to Europe. Price of a Boeing in the U.S. is 15 mln $ and 10 mln e in Europe. European company, Mercedes-Benz, owns a plant in the U.S. that produces 20,000 SUVs and sells all of them in the U.S. The price of a Mercedes-Benz SUV is 50 tsnd $. Investment and government purchases are zero. Compute GDP, GNP and CA for both economies. Solution. First we have to come up with the euro/dollar exchange rate. We can use Boeing’s foreign and domestic price to get a 1.5 euro/dollar exchange rate. We use this number to construct NIA. Table 1: National Income Accounts for the U.S. and Japan spending \ Country U.S., bln $ Europe, bln euro Europe, bln $ Consumption 1.90 0.40 0.60 Investment 0.00 0.00 0.00 Government 0.00 0.00 0.00 Current Account 0.60-0.40-0.60 GDP 2.50 0.00 0.00 GNP 1.50 0.67 1.00 2...
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This note was uploaded on 03/30/2009 for the course PAM 2040 taught by Professor Lewis during the Fall '07 term at Cornell University (Engineering School).
- Fall '07