chapter 6.4 part 1 Flashcards
what is GDP commonly used to measure
economic welfare or standard of living in a nation
what are two issues that arise when comparing GDP of two nations
GDP is measured in a country’s own currency and there is a difference in population of each country
how do we solve the issue that arises when comparing GDP of two nations
converting to a common currency, and divide GDP by population
exchange rate
which is the value of one currency in terms of another currency it is essentially the “common denominator” you convert to
how do you express exchange rates
country A’s currency that needs to be traded for a single unit of country B’s currency
what are two types of exchange rates
market exchange rates, or purchasing power parity equivalent exchange rates (PPP)
how to market exchange rates vary
on a day to day depending on supply and demand in foreign exchange markets
what do PPP measurements provide
a longer run measure of the exchange rate
what type of exchange rate do economist usually use
PPP for cross country comparisons
what is an example of converting country A’s currency into country B’s
Brazil’s GDP in US dollars: Brazil’s GDP in reals/ exchange rate (reals/$U.S.)
who has the largest GDP in the world by a considerable amount
the USA
which country is the third largest population in the world and which countries is it well behind
USA and well behind China and India.
what questions does GDP per capita answer
is the GDP large because of the big population or is it large because of per person basis
what equation is GDP per capita
GDP per capita = GDP/population
