Question

What is the percentage increase in China's per capita GDP when one switches from foreign exchange rates to purchasing power parity?

Short answer

The percentage rise in China's per capita GDP when foreign exchange rates are replaced by purchasing power parity is 74.04%. .

Step-by-step solution

Introduction

• Purchasing power parity is a concept that states that trade rates across nations are in sync while purchasing power in both countries is fairly similar.
• As such, it alludes to conversion scale alterations that take into account the difference in average pricing for most ordinary commodities across countries.

Explanation

Simply using a new transformation scale to change north of one country's per capita GDP into dollars will not illuminate us much with respect to the lifestyle of people in that country.

This is because not all work and products are traded across countries.

Likewise, to break down the lifestyle across countries, GDP and per-capita GDP are changed by considering purchasing power uniformity.

The Percentage increase is

$=\frac{13,210-7,590}{7,590}\times 100$

$$\begin{gathered} =\frac{5,620}{7,590}\times 100 \\ =74.04\% \end{gathered}$$

Hence the percentage increase in China's per capita GDP when one switch from foreign exchange rates to purchasing power parity is $74.04\%$