a) Compute the GDP per capita for each country in domestic currencies.

GDP per capita in poor country = 5*30,000,000

GDP per capita in rich country = 120*100 + 600

b) What is the GDP per capita of the poor country in terms of the rich country’s currency, using the available market
exchange rate
GDP per capita of the poor country in terms of the rich country's currency = 151,250,000 / 25,000 = 6050

c) Compute the GDP of the poor country using the purchasing power parity (PPP) based method using an internationally
standardized basket of 5 cars and 100 education units. Please provide the rationale for this approach.
5 cars and 100 education units:Poor country: 5*30,000,000 + 100 * 5,000 = 150,500,000Rich country: 5*100 + 100*20 = 2500
PPP = 150,500,000/2500 = 6020
oor country = 5*30,000,000 + 250*5,000 = 151,250,000
ch country = 120*100 + 6000*20 = 132,000

available market

sing an internationally
ch.
ry: 5*100 + 100*20 = 2500
year Real GDP Nominal GDP GDP Deflator GDP Deflator ( GDP Deflator (bGDP Deflator (b
2004 1,875,584.21 989,542.50 52.759 100 84.464402927 100
2005 2,017,139.35 1,160,527.34 57.533 109.04869311 92.107327538 109.04869311
2006 2,157,894.83 1,347,829.25 62.463 118.39307038 100 118.39307038
2007 2,311,741.80 1,583,050.89 68.479 129.79586421 109.63130173 129.79586421
2008 2,442,627.69 2,051,931.24 84.005 159.22401865 134.48761667 159.22401865
2009 2,574,477.59 2,297,116.94 89.227 169.12185599 142.84776588 169.12185599
2010 2,739,843.17 2,739,843.17 100 189.54112095 160.09477611 189.54112095
2011 2,915,553.94 3,539,881.31 121.414 230.12945659 194.37747146 230.12945659
2012 3,076,041.91 4,073,762.29 132.435 251.01878353 212.02151674 251.01878353
2013 3,246,870.23 4,473,655.60 137.784 261.15733808 220.58498631 261.15733808
2014 3,455,392.13 4,937,031.68 142.879 270.8144582 228.74181515 270.8144582
2015 3,696,825.71 5,191,323.73 140.427 266.16690991 224.81629124 266.16690991
2016 3,944,143.68 5,639,401.00 142.982 271.00968555 228.90671277 271.00968555
2017 4,217,874.76 6,293,904.55 149.22 282.83326068 238.89342491 282.83326068
2018 4,521,444.21 6,977,294.13 154.316 292.4922762 247.0518547 292.4922762
2019 4,844,732.70 7,615,567.53 157.193 297.94537425 251.65778141 297.94537425
2020 4,987,353.63 7,966,121.55 159.726 302.74645084 255.71298209 302.74645084
2021 5,115,805.10 8,398,606.22 164.17 311.16965826 262.82759394 311.16965826
2022 5,425,166.40 9,249,159.56 170.486 323.14107546 272.93917999 323.14107546
a) Compare the price level between 2004 and 2014. Phải tính GDP Deflator base year là 2004
GDP Deflator = GDP Nominal/ GDP Real *100 170.8144582 90.12

b) If 2004 is the based year, what is the price level of 2022.

323.14107546 means the price level increase 223% compared to 2004

c) Compute the level of real GDP for the year 2022 if the base year is 2006.
3,388,725.49 GDP Nominal của 2022/ GDP Deflator của 2022 mà base year là 2006 * 100
3,388,725.49
d) Compute the growth rate of real GDP from 2021 to 2022 when 2004 is the base year; 2014 is the base year. Are the results
the same? Please explain.
Growth rate: tốc độ tăng trưởng = (giá trị năm sau - năm trước)/năm trước x 100 (Đơn vị là % )
B2004 Real GDP 2021 2,699,044.07
Real GDP 2022 2,862,266.75
Growth rate 6.05%
B2014 Real GDP 2021 7,309,401.58
Real GDP 2022 8,049,647.74
Growth rate 10.13%
 GDP Deflator (b2014)
36.925650375
40.266939158
43.717411236
47.927967021
58.794504441
62.44934525
69.989291638
84.97679855
92.690318381
96.434045591
100
98.283862569
100.07208897
104.43802098
108.00467528
110.01826721
111.79109596
114.90142008
119.32194374

e base year. Are the results

Y 2018 = 102.6% Y2017 10260
K 2018= 101.2% K2017 10120
L 2018 = 100.5% L2017 100.5

The level of technology in 2017 A2017 5.0118723363

A2017 5.0118723363
The rate of technological progress between 2017 and 201A2018 5.0935656261
A2018 5.0935656261
Growth rate 1.63%
Growth rate 1.63%
a) If no further information is given, what do you predict regarding the level of income per worker in Mexico in 2021?

b) Now take into account the following additional information: from 2017 to 2018 onward the rate of technological progress
was to decrease to g = 0.01. What is your new prediction regarding the level of income per worker in Mexico in 2021?
Provide detailed economic rationale for the change in your prediction

c) For the year 2017, derive the golden rule level of consumption per effective worker. If technological progress for 2017 and
all following years was equal to g = 0.02 , what is the time path of consumption per worker implied by this golden rule level
of consumption per effective worker?
 Income per worker = $16,000
s=0.15
n=0.01
δ = 0.03
g= 0.02
α = 0.4

Mexico in 2021?

technological progress
n Mexico in 2021?

cal progress for 2017 and

by this golden rule level