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24 April, 13:22

g A country wants its real GDP per capita to grow at a rate of 2.23% per year. If the rate of population growth in the country is 2.34% per year then this means that real GDP must grow at what rate per year

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  1. 24 April, 13:41
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    Answer: Real GDP = 5.2182% = 5.22%

    Explanation:

    Real GDP calculates the increase in goods and services holding the impact of prices constant. Real GDP adjusts the impact of inflation of Prices in order to calculates the change in Goods and services over a given period. Since GDP is also referred to as National Income we can say Real GDP measures the increase in National Income excluding the impact of inflation.

    Real GDP Per Capita than Takes into account the number of people in the Economy (Population). Real GDP per capita is calculated by Dividing Real GDP by the number of people in the country or by a county's population. This tells us that Real GDP per Capita measures the amount of National Income (excluding the Impact of inflation) per person.

    We also can define Real GDP Per capita as the average number of Goods and services each person in the economy would receive if all goods and services produced in the economy were distributed to each and every person in the country.

    A country has a 2.34% population growth and targets a Real GDP per Capita of 2.23% per year.

    We know That Real GDP per Capita is calculated by Dividing Real GDP by number or people in the country (Population). Therefore we have the following equation; Real GDP / Population = Real GDP per Capita

    Real GDP/2.34% = 2.23%

    by cross multiplying this equation we get

    Real GDP = 2.34% x 2.23%

    Real GDP = 5.2182% = 5.22% (rounded off to two decimals)

    Real GDP would need to grow by 5.22% in order to achieve a target or Real GDP per capita growth of 2.23% per year
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