Evaluate the market basket using exchange rate and PPP.
a. Evaluate if B’s currency is over-valued or under-valued. (Another way to think about it- CitizenA from country A is going to country B. Is the currency that CitizenA purchases (exchanging dollars to B’s currency) going to purchase more, less, or the same quantity of goods/services that CitizenA could purchase in country A?)
b. Evaluate if A’s currency is over-valued or under-valued. (Another way to think about it- CitizenB from country B is going to country A. Is the currency that CitizenB purchases (exchanging their currency into dollars) going to purchase more, less, or the same quantity of goods/services that CitizenB could purchase in country B?)
1. Check Gauchospace for your assigned country, answer the following questions.
a. Provide a (very) brief history of your country. (No more than ½ a page)
b. Calculate the old HDI using the formula. Do not pull values from the website for the indexes. Calculate your own indexes.
c. Now allow GDP to increase by a factor of 4 (multiply your counties GDP by 4). Recalculate the HDI.
d. Assume adult literacy is 100%. Use your old income, not the increased income. Recalculate the HDI.
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Economics 114A Development Economics HW1 Use the following table to answer the following questions. CountryProduction of TV setsPrice of TV sets in local currencyProduction of haircutsPrice of haircuts in local currency GDP in local currencyGDP exchange rateGDP PPPA56$14140$5B2128152 Convert B’s GPD to dollars using the exchange rate. Assume the law of one price. Convert B’s GPD to dollars using Purchasing Power Parity. Let your market basket be 10 TV sets and 10 haircuts. Evaluate the market basket using exchange rate and PPP. Evaluate if B’s currency is over-valued or under-valued. (Another way to think about it- CitizenA from country A is going to country B. Is the currency that CitizenA purchases (exchanging dollars to B’s currency) going to purchase more, less, or the same quantity of goods/services that CitizenA could purchase in country A?) Evaluate if A’s currency is over-valued or under-valued. (Another way to think about it- CitizenB from country B is going to country A. Is the currency that CitizenB purchases (exchanging their currency into dollars) going to purchase more, less, or the same quantity of goods/services that CitizenB could purchase in country B?) Check Gauchospace for your assigned country, answer the following questions. Provide a (very) brief history of your country. (No more than ½ a page) Calculate the old HDI using the formula. Do not pull values from the website for the indexes. Calculate your own indexes. Now allow GDP to increase by a factor of 4 (multiply your counties GDP by 4). Recalculate the HDI. Assume adult literacy is 100%. Use your old income, not the increased income. Recalculate the HDI. Which had the bigger affect on HDI, income or adult literacy? Briefly explain. Calculate the NHDI using the formula. Do not pull values from the website for the indexes. Calculate your own indexes. China has been the fastest growing nation for the past quarter of a…
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