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ps1_114

# ps1_114 - Econ 114 Javier Birchenall Due date Tuesday...

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Econ 114 Javier Birchenall Due date: Tuesday, October 5, 2010 Problem set 1: PPP and basic growth facts The following problem set will serve two purposes. First, it will acquaint you with some basic measurement perspectives and with some growth facts that you will seek to explain later in the quarter. Second, it will refresh your memory about the use of Excel. If you have never used Excel before, please see “Introduction to Excel.” Students who are already familiar with Excel, but not the speci fi c operations required for this lab, may fi nd “Excel Hints for Lab 1” at the end of this assignment useful. Plan to spend 6 hours (maybe more) on these questions. Please return the problem set on time (next Tuesday during class), remember you have the chance to miss one and only one, use it wisely. If you have any problems regarding the questions please contact me immediately by e-mail: [email protected] . Good luck! I. Purchasing power exchange rates (50%) Suppose there are only two goods produced in the world: computers, which are traded internationally, and ice cream, which is not. The following table sows information on the production and prices of computers and ice cream in two countries: Computers Ice cream Price of Price of produced per produced per computers in ice cream in capita capita local currency local currency Richland 12 4 2 4 Poorland 3 1 1 1 1. Calculate the level of GDP per capita in each country, measured in its own currency.

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ps1_114 - Econ 114 Javier Birchenall Due date Tuesday...

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