Question

The accompanying table shows data on nominal GDP (in billions of dollars), real GDP (in billions of 2005 dollars), and population (in thousands) of the United States in 1960, 1970, 1980, 1990, 2000, and 2010. The U.S. price level rose consistently over the period 1960–2010.

Year Nominal GDP (billions of dollars) Real GDP (billions of 2005 dollars) Population (thousands)

1960 $526.4 $2,828.5 180,760

1970 1,038.5 4,266.3 205,089

1980 2,788.1 5,834.0 227,726

1990 5,800.5 8,027.1 250,181

2000 9,951.5 11,216.4 282,418

2010 14,526.5 13,088.0 310,106

1) Why is real GDP greater than nominal GDP for all years until 2000 and lower for 2010?

2) Calculate the percent change in real GDP from 1960 to 1970, 1970 to 1980, 1980 to 1990, 1990 to 2000, and 2000 to 2010. Which period had the highest growth rate?

3) Calculate real GDP per capita for each of the years in the table.

4) Calculate the percent change in real GDP per capita from 1960 to 1970, 1970 to 1980, 1980 to 1990, 1990 to 2000, and 2000 to 2010. Which period had the highest growth rate?

5) How do the percent change in real GDP and the percent change in real GDP per capita compare? Which is larger? Do we expect them to have this ­relationship?

Answer 1