Suppose the value of Indian nominal GDP is 125 trillion rupees

Economics Jun 23, 2021

Suppose the value of Indian nominal GDP is 125 trillion rupees. 65 Indian rupees is worth one US dollar. In addition, the price level in the US, divided by the price level in India is 3.9. The value of Indian GDP in U.S. dollars, adjusted for price differences is:
(a) $7.5 trillion (b) $0.9 trillion (c) $32.1 trillion (d) $2083 trillion (e) $0.4 trillion

Expert Solution

Answer

(e)

Explanation

Computation of Value of Indian GDP in US Dollars:

Value of Indian GDP in US Dollars = Indian DP in US Dollars/US Prices

Here,

Indian DP in US Dollars = 125 trillion / 65 = 1.9231 trillion dollars

US Prices = 3.9

Value of Indian GDP in US Dollars = 1.9231 trillion dollars / 3.9 = $0.49 trillion or $0.4 trillion. The difference is due to rounding off.

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