# You are a staff economist for your local bank and the bank manager claims that in 2012 the Chinese economy was bigger than in the United States. To prove him wrong you decide to put your economics training to work for you and decide to show him China’s GDP in U.S. dollars, and to show him how smart you are, you also decide to calculate PPP GDP in China and compare that to the United States as well. How big is China’s economy? You have the following data: In 2012, China’s nominal GDP was CY 51.932 trillion (CY = Chinese yuan); The yuan-dollar exchange rate was CY 6.31/\$1; Nominal GDP in the United States was \$15.685 trillion; The price level in the United States was 1.00 and the price level in China was 0.60

You are a staff economist for your local bank and the bank manager claims that in 2012 the Chinese

economy was bigger than in the United States. To prove him wrong you decide to put your economics

training to work for you and decide to show him China’s GDP in U.S. dollars, and to show him how

smart you are, you also decide to calculate PPP GDP in China and compare that to the United States

as well.

How big is China’s economy?

You have the following data:

In 2012, China’s nominal GDP was CY 51.932 trillion (CY = Chinese yuan);

The yuan-dollar exchange rate was CY 6.31/\$1;

Nominal GDP in the United States was \$15.685 trillion;

The price level in the United States was 1.00 and the price level in China was 0.60

Chaina’s GDP in U.S. dollars = CY 51.932/ 6.31 trillion = \$8.23 trillion.

GDP of United States = \$15.685 trillion.

Purchasing power parity = 0.60 chinese yuan/ \$ 1.00

0.60

Therefore economy of United States is bigger than economy of China.

Asked on February 15, 2018 in