The local currency in Peru is the Peruvian Nuevo Sol (PNS). In 2020, the official exchange rate between the PNS and the USD was 3 (i.e., 3 PNS = 1USD). Table 1 gives local currency prices of three...

Discuss the difference in GDP per capita using the two different exchange rates.

Which one is larger? Why?

Peru’s GDP per capita in USD using Official Exchange Rate: USD 6,000
Peru’s GDP per capita in USD using PPP Exchange Rate: USD 17,418.23

Extracted text: The local currency in Peru is the Peruvian Nuevo Sol (PNS). In 2020, the official exchange rate between the PNS and the USD was 3 (i.e., 3 PNS = 1USD). Table 1 gives local currency prices of three goods in Peru and the United States. Table 1 also gives the expenditure shares of each good (i.e., what fraction of total expenditures do people spend on each good). Table 1. Local Prices & Expenditure Shares in Peru and the U.S. Prices in Local Currencies Item Expenditure Share Peru U.S. Corn (1 kg) T-Shirts (1 shirt) Rent (2 bedroom apartment) 0.3 6 PNS 2 USD 0.2 45 PNS 15 USD 0.5 1,000 PNS 1,000 USD