Question

After several years of solid growth in real per capita GDP, economic growth in Brazil slowed substantially from 2012 to 2016, and then rebounded in 2017. The 2017 Brazilian data below are from the World Bank database called World Development Indicators.

Nominal GDP Growth Rate	GDP Deflator Growth Rate	Population Growth Rate
14.58%	3.79%	0.79%

A. What was the rate of economic growth for Brazil in 2017? Give your answer to one decimal if necessary.

B. If the price level (as measured by the GDP deflator) continues to grow at 3.79% per year, approximately how long will it take for prices to double? Give your answer to one decimal if necessary.

C. If the population of Brazil continues to grow at this rate, how long until it doubles? Give your answer to one decimal if necessary.

Answer 1

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A. Rate of economic growth = GDP deflator growth rate - population growth rate

= 3.79 - 0.79

= 3%

B. We can compute time for prices to double using the rule of 72. The rule of 72 is a method for estimating doubling time of any given rate.

Here doubling time = 72/ growth rate = 72/3.79 = 18.99 = 19 years (approx)

C. Again using the rule of 72 we can compute time for doubling of population

Here doubling time = 72/ growth rate = 72/0.79 = 91.13 years