You Are a Staff Economist for Your Local Bank and the Bank

Essay

You are a staff economist for your local bank and the bank manager claims that in 2014 the Chinese economy was bigger than that of 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; to show him how smart you are, you also decide to calculate the real GDP of China in U.S. dollars and prices and compare that to the United States as well. You have the following data: in 2014, China's nominal GDP was CY 63.6 trillion (CY = Chinese yuan); the yuan-dollar exchange rate was CY 6.14/$1; nominal GDP in the United States was $17.3 trillion; the price level in the United States was 1.0 and the price level in China was 0.6. How big is China's economy?