Question

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

Answer 1

Answer:

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%