Question

Suppose that nominal GDP was $9750000.00 in 2005 in Orange County California. In 2015, nominal GDP was $11500000.00 in Orange County, California. The price level rose 2.00% between 2005 and 2015, and population growth was 3.25%. Calculate the following figures for Orange County California between 2005 and 2015.

a. Nominal GDP growth was %.

b. Economic growth was %.

c. Inflation was %.

d. Real GDP growth was %.

e. Per capita GDP growth was %.

f. Real per capita GDP growth was %.

Answer 1

ANSWER:

GIVEN DATA

• nominal GDP was $9750000.00 in 2005 in Orange County California
• In 2015, nominal GDP was $11500000.00 in Orange County, California
• price level rose 2.00% between 2005 and 2015
• population growth was 3.25%.

nominal GDP growth was=(11500000/9750000)^(1/10)-1

=1.66%

economic growth was=((1+1.66%)/(1+1.50%))-1

=0.16%

inflation rate=price level growth

=1.50%

real GDP growth rate=economic growth rate=((1+1.66%)/(1+1.50%))-1

=0.16%

per capital real GDP growth=((1+0.16%)/(1+3.50%))-1

=-0.727