ECN-115A Fall 2009 PS_2 Key

ECN-115A Fall 2009 PS_2 Key - Steve Vosti ARE/ECN 115A...

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Steve Vosti ARE/ECN 115A 1 Answers to Problem Set 2: Measuring Aggregate Economic Performance Consider the case of Zambia, a country in Central Africa. By 1990, Zambia’s economy depended on two major products: copper and grains (mainly maize). In 1990, its GDP was K113 billion, where K stands for kwacha. 1 The population of Zambia was 8.1 million. In 1990, the exchange rate was 29 kwacha to one U.S. dollar (throughout the problem set, we work in U.S. dollars). 1. Calculate Zambia’s GDP in per-capita terms for 1990 in kwacha. capita per K million billion K GDP Zambia 13950 1 . 8 113 2. Calculate Zambia’s GDP in per-capita terms for 1990 in dollars. capita per USD K K GDP Zambia 481 $ / 29 13950 Let’s assume that Zambia’s 1990 output could be broken down as follows: PRODUCT OUTPUT (tons) PRICE (kwacha/ton) WORLD PRICE (dollars/ton) Copper 10 million 5650 200 Maize 200 million 226 25 Manufactured Good 1 million 11300 500 3. Using the data in the table above, recalculate Zambia’s GDP in kwacha terms. billion K ton K tons million ton K tons million ton K tons million GDP Zambia 113 ) / 11300 )( 1 ( ) / 226 )( 200 ( ) / 5650 )( 10 ( 4. Using the data in the table above, calculate Zambia’s GDP for 1990 in purchasing power
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ECN-115A Fall 2009 PS_2 Key - Steve Vosti ARE/ECN 115A...

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