Question

RATES of GROWTH

Year	Nominal GDP (Billions)	Gdp Deflator	Population	CPI	Medium Family Income
2017	2,102.57	115.006	36.514	130.658	84,950
2016	2,018.68	112.53	36.188	128.247	82,110
2015	1,985.65	112.295	35.825	126.542	80,940
2014	1,973.04	112.893	35.497	125.158	78,570
2013	1,892.19	110.944	35.102	122.8	76,550
2012	1,822.81	109.247	34.699	121.675	74,540
2011	1,769.92	107.929	34.303	119.842	72,240
2010	1,662.13	104.539	33.959	116.475	69,860
2009	1,567.37	101.619	33.581	114.45	68,410
2008	1,652.92	104.005	33.199	114.108	68,860
2007	1,573.53	100	32.848	111.45	66,550
2006	1,492.21	96.788	32.529	109.125	63,600
2005	1,417.03	94.323	32.203	106.967	60,600

1. Calculate and state the following for the years shown for the Canadian economy: the rates of growth (% per year) of

1. nominal GDP;        
2. real GDP;        
3. real GDP per capita.
4. Real Medium family income

(Provide the raw data for all the years and show your work at least once for each category.)

2. Plot all your results calculated in ( 1 ) above on one graph. Must use graph paper and utilize the entire page. (Use a time series graph.)

Please answer according to Canadian education standards.

Answer 1

Table 1

a. Rate of growth of nominal GDP = (Nominal GDP in time period t - nominal GDP in time period t-1) *100 / nominal GDP in time period t-1

Nominal GDP in 2017 = 2,102.57 billion

Nominal GDP in 2016 = 2,018.68 billion

Rate of growth of nominal GDP in 2017 = (Nominal GDP in 2017 - nominal GDP in 2016) *100 / nominal GDP in 2016

= (2,102.57-2,018.68) *100 / 2,018.68

= 0.041 *100

=4.1

Rate of growth of nominal GDP has been shown in table 1

b.

We are given nominal GDP values and GDP deflator. So, calculate Real GDP by putting these two values.

In 2017,

Nominal GDP = 2,102.57 billion

GDP deflator = 115.006

Real GDP = (2,102.57*100) / 115.006 = 1,828.226 billion

After calculating real GDP, Growth rate of real GDP can be calculated as (real GDP in time period t - real GDP in time period t-1) *100 / real GDP in time period t-1

real GDP in 2017 = 1,828.226 billion

Nominal GDP in 2016 = 1793.904 billion

Rate of growth of real GDP in 2017 = (real GDP in 2017 - real GDP in 2016) *100 / real GDP in 2016

= (1,828.226-1793.904) *100 / 1793.904

= 1.9

Rate of growth of real GDP has been shown in table 1

Table 2

c. Real GDP per capita = real GDP / population

Real GDP per capita in 2017 = 50.06

Real GDP per capita in 2016 = 49.57

Growth rate of real GDP per capita =  Real GDP per capita in time period t - Real GDP per capita in time period t-1) *100 /Real GDP per capita in time period t-1

In 2017,

Growth rate of real GDP per capita = (50.06 -49.57) *100 /49.57 = 1.003

Use the same method as used in part a and b to calculate growth rate of real GDP per capita

growth rate of real GDP per capita in given in table 2.

d. real medium family income = medium family income / CPI

real medium family income in 2017 = 84,950/130.66 = 650.17

real medium family income in 2016 = 82,110/123.25 = 640.28

Rate of growth of real medium family income = (real medium family income in 2017 - real medium family income in 2016) *100 / real medium family income in 2016

= (650.17 - 640.28) * 100 / 640.28

=1.54

Rate of growth of real medium family income is given in table 2

Graph of all the variables is plotted in figure 1

figure 1