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23 April, 22:25

Suppose an economy's real GDP is $40,000 in year 1 and $42,200 in year 2. What is the growth rate of its real GDP? Instructions: Round your answer to two decimal places. The growth rate of the economy's real GDP = % Assume that population is 100 in year 1 and 102 in year 2. What is the growth rate of real GDP per capita? Instructions: Round your answer to two decimal places. The growth rate of the economy's real GDP per capita = %

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  1. 23 April, 22:51
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    The growth rate of the economy's real GDP = 5.50%

    The growth rate of the economy's real GDP per capita = 3.43%

    Explanation:

    The GDP growth rate formula is:

    [GDP (t) - GDP (t-1) / GDP (t-1) ]*100

    t is years. We use this formula for this problem:

    ($42,200-$40,000) / $40,000 = 0.055*100 = 5.50%

    The growth rate of the economy's real GDP = 5.50%

    The formula of the real GDP per capita is:

    Real GDP per capita = Real GDP (t) / population (t)

    Year 1:

    Real GDP per capita = $40,000/100 = $400

    Year 2:

    Real GDP per capita = $42,200/102 = $413.72

    To calculate the growth rate of the real GDP per capita we use the same the same formula before but now with real GDP per capita

    ($413.72-$400) / $400 = 0.0343 = 3.43%

    The growth rate of the economy's real GDP per capita = 3.43%
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