Question: Now, calculate India's 2001 purchasing power parity GDP valuing India's 2001 output using 2001 US prices (Equation 2.5 from the text). Is this value larger or smaller than India's total nominal GDP you calculated in problem using the official exchange rate conversion rate? What does the PPP GDP value you have calculated mean compared to the value you calculated in problem?
Problem: Now calculate total nominal GDP for each country valued not in its own currency, but in US dollars. If the average exchange rate in 2001 was 12.5 rupees = $1, India's total nominal GDP valued in US$ at the official exchange rates is equal to ___________? Can US and India GDP be compared now to say which country is "better off"? Explain.