Question

Suppose that nominal GDP was $10000000.00 in 2005 in Orange County California. In 2015, nominal GDP was $11750000.00 in Orange County California. The price level rose 3.00% between 2005 and 2015, and population growth was 4.00%. Calculate the following figures for Orange County California between 2005 and 2015. Give all answers to two decimals.

a. Nominal GDP growth was     %.

Part 2   (1 point)

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b. Economic growth was    %.

Part 3   (1 point)

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c. Inflation was    %.

Part 4   (1 point)

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d. Real GDP growth was    %.

Part 5   (1 point)

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e. Per capita GDP growth was    %.

Part 6   (1 point)

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f. Real per capita GDP growth was    %.

Answer 1

a) Nominal GDP growth rate= {(11750000–10000000)/10000000}×100= 75%

b) economic growth measures the change in GDP.

Hence, nominal GDP growth rate can also be considered as the economic growth rate.

Hence, Economic Growth was 75%

c) The increase in the price level is known as the Inflation. The price level rose by 3% between 2005 and 2015. Hence, Inflation was 3%.

d) Real GDP growth= Nominal GDP growth rate– Inflation Rate= 75%–3%= 72%.

e) Per capita GDP growth= Nominal GDP Growth Rate–Population growth rate= 75%–4%= 71%.

f) Real GDP per capita growth = Real GDP growth rate–Population Growth Rate= 72%–4%= 68%.