Question

Suppose that nominal GDP was $9500000.00 in 2005 in Montgomery County Maryland. In 2015, nominal GDP was $11250000.00 in Montgomery County Maryland. The price level rose 1.50% between 2005 and 2015, and population growth was 4.25%. Calculate the following figures for Montgomery County Maryland between 2005 and 2015. Give all answers to two decimals.

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

a. Nominal GDP growth was = [(Nominal GDP in 2015 - Nominal GDP in 2005) / Nominal GDP in 2005]*100

= [11250000-9500000]/9500000*100

= 18.42%

b. Economic growth was  Nominal GDP growth rate - price level growth - population growth

= 18.42-1.5-4.25

= 12.67%

c. Inflation was = growth rate of price level = 1.5%

d. Real GDP growth was Growth in Nominal GDP - Growth in the price level

= 18.42-1.5

= 16.92%

e. Per capita GDP growth was growth in NGDP- growth in population

= 18.42-4.25

= 14.17%

f. Real per capita GDP growth was Growth in NGDP- Price level - Population

= 18.42-1.5-4.25

= 12.67%