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A country’s real GDP per capita increased from $5,700 to $5,850 in one year. a. Calculate...

A country’s real GDP per capita increased from $5,700 to $5,850 in one year.
a. Calculate the country’s real GDP per capita growth rate.
b. What can the government do to increase this growth rate? List three suggestions.
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Answer #1

a) Growth Rate = [(GDP in current year - GDP in previous year)/GDP in previous year]*100

Growth Rate = [(5,850 - 5,700)/5,700]*100

Growth Rate = 2.63%

b) Government can increase the growth rate using fiscal policies:

1. Reducing taxes: By reduces taxes, the price will fall and quantity of output will rise.

2. Increase in subsidy: It will promote suppliers to produce more.

3. Increasing government expenditure: This will increase employment opportunities and output as well.

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