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13 August, 03:55

Consider a country with a nominal gross domestic product (GDP) of $10 billion in 2010 and $15 billion in 2015. In the same period the population increased by 2 percent and price levels decreased by 10 percent. What is the economic growth for this country

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  1. 13 August, 04:03
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    58%

    Explanation:

    For computing the economic growth first we have to determine the change in nominal GDP i. e gross domestic product growth rate which is shown below:

    Change in nominal GDP growth rate is

    = (GDP as on 2015 - GDP as on 2010) : GDP as on 2010 * 100

    = ($15 billion - $10 billion) : $10 billion * 100

    = 50%

    Now

    Economic growth is

    = Change in nominal gdp growth rate + decreased in price level - increased in population

    = 50% + 10% - 2%

    = 58%
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