Question

Last year real GDP in an imaginary economy was $10 billion and the population was 2 million. This year, real GDP is $12 billion and the population was 2.2 million. What was the growth rate of real GDP per person during the year?

Answer 1

Per capita GDP last year= Real GDP/ population

= 10billion/ 2 million

=5 per capita GDP

Per capita GDP this year = 12billion/ 2.2 million

= 5.45 per capita GDP

from here we use our growth function to find the growth rate.

(This year per capita GDP- last year per capita ) whole divided by last year Per capita GDP and resulting amount multiplied by 100

= (5.45-5.00)/5

= 0.09

Growth rate of real GDP per person is 9%

Note: don't worry about units. It will be solved like this only.