Question

# 12. Suppose that real output for a small developing country in year 1 is \$1.9 billion...

12.

Suppose that real output for a small developing country in year 1 is \$1.9 billion and that population is 2.1 million.

Instructions: In parts a and b, round your answers to the nearest dollar.

a. What is per capita GDP?

\$

b. If real output in year 5 increases to \$2.2 billion and population increases to 2.5 million, what is the new per capita GDP?

\$

c. Has the average standard of living for this small developing country undergone an increase or a decrease?

(Click to select)   Decrease   Increase

13

Suppose that a developing country's real GDP at the end of the previous year was \$43 billion. A census taken that year estimated population to be 48 million. Assume that real GDP is projected to increase by 3.5 percent and that population is expected to grow by 0.27 percent by the end of the current year.

Based on these estimates, what is the expected real GDP per capita at the end of the current year?

\$

12)

Real GDP in year 1=\$1.9 billion=1.9*1000=\$1900 million

Population in year 1=2.1 million

Per Capita Real GDP in year 1=Real GDP in year 1/Population in year 1=1900/2.1 =904.7619 or say \$905

b)

Real GDP in year 5=\$2.2 billion=\$2200 million

Population in year 5=2.5 million

Per Capita Real GDP in year 5=Real GDP in year 5/Population in year 5=2200/2.5 =\$880

c)

Per Capita Real GDP has decreased. We can say that average standard of living has undergone a decrease.

Problem 13

Real GDP last year=\$43 billions=\$43000 million

Population last year=48 million

Expected Real GDP at the end of current year=43000*(1+3.5%)=\$44505 million

Expected Population at the end of current year=48*(1+0.27%) =48.1296 million

Expected Per Capita Real GDP at the end of current year=44505/48,1296=\$924.69 or say \$925

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