Question

Suppose that nominal GDP was $12 trillion in 2040 in Mordor. In 2050, nominal GDP was $15 trillion in Mordor. The price level fell 5% between 2040 and 2050, and population growth was 1%. Between 2040 and 2050 in Mordor, nominal GDP growth was % and economic growth was %. Give your answers to one decimal place. Part 2 (1.3 points) Suppose that nominal GDP was $20 trillion in 2040 in Mordor. In 2050, nominal GDP was $18 trillion in Mordor. The price level rose 5% between 2040 and 2050, and population growth was 1%. Between 2040 and 2050 in Mordor, nominal GDP growth was % and economic growth was %. Give your answers to one decimal place. Part 3 (1.3 points) Suppose that nominal GDP was $8 trillion in 2040 in Mordor. In 2050, nominal GDP was $10 trillion in Mordor. The price level rose 18.0% between 2040 and 2050, and population growth was 14.0%. Between 2040 and 2050 in Mordor, nominal GDP growth was % and economic growth was %. Give your answers to one decimal place.

Answer 1

Part 1
Nominal GDP growth = (15 - 12)*100/12 = 25 %
Economic growth = Nominal GDP growth rate - inflation rate - population growth rate = 25 % - (-5 %) - 1 % = 29 %

Part 2
Nominal GDP growth = (18 - 20)*100/20 = -10%

Economic growth = Nominal GDP growth rate - inflation rate - population growth rate = -10% - 5% - 1% = -16%

Part 3

Nominal GDP growth = (10 - 8)*100/8 = 25%

Economic growth = Nominal GDP growth rate - inflation rate - population growth rate = 25% - 18% - 14% = -7 %.

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