Question

Suppose that nominal GDP was $9000000.00 in 2005 in Orange County California. In 2015, nominal GDP was $12000000.00 in Orange County California. The price level rose 3.00% between 2005 and 2015, and population growth was 4.50%. Calculate the following figures for Orange County California between 2005 and 2015. Give all answers to two decimals. a. Nominal GDP growth was %.
Nominal GDP growth was __%
Economic growth was __%
Inflation was __%
Real GDP growth was __%
Per capita GDP growth was __%
Real per capita GDP growth was __%

Answer 1

Answer:

i. Norminal GDP growth

National GDP growth = Nominal GDP (current year) - Nominal GDP (base year) / Nominal GDP (base year) * 100

=(12,000,000 - 9,000,000) / 9,000,000 * 1000

= 3,000,000 / 9,000,000 * 100

=33.33%

Hence, the nominal GDP growth is 33.33%

ii. Economic growth

Economic growth = {GDP (current year) / GDP (base year) - 1 } * 100

= {12,000,000 / 9,000,000 - 1} * 100

=(1.33 - 1) * 100

= 0.33 * 100

= 33%

Hence, the economic growth is 33.33%

iii. Inflation

The inflation is the situation of increase in the general price level of the goods and services produced by the economy. Here, the price level rose by 3%, so the inflation become 3%

iv. Real GDP growth

Real GDP growth = Nominal GDP growth - Inflation

= 33.33% - 3%

= 30.33%

Hence, the real GDP growth is 30.33%

v. Per Capita GDP growth

Per Capita GDP growth = Nominal GDP growth - Population growth

= 33.33% - 4.50%

= 28.83%

Hence, the Per Capita GDP growth is 28.83%

vi Real Per Capita GDP

Real Per Capita GDP = Real GDP growth - Population growth

= 30.33% - 4.50%

= 25.83%

Hence, the Real Per Capita GDP growth is 25.83%