Question

Suppose that nominal GDP was $9000000.00 in 2005 in Orange County California. In 2015, nominal GDP was $11000000.00 in Orange County California. The price level rose 2.50% between 2005 and 2015, and population growth was 3.25%. Calculate the following figures for Orange County California between 2005 and 2015. Give all answers to two decimals. a

Part 1 Nominal GDP growth was %.

Part 2 . Economic growth was %.

Part 3 Inflation was %.

Part 4 Real GDP growth was %.

Part 5 Per capita GDP growth was %

Part 6 Real per capita GDP growth was %.

Answer 1

Solution:-

(A). Nominal GDP growth rate is the % change in nominal GDP from 2005 to 2015

Nominal GDP growth = (11000000 – 9000000) / 9000000 * 100

                                   = 22.22%.

(B). Economic Growth = Nominal GDP growth rate – Inflation - population growth rate

                                            = 22.22% - 2.50% - 3.25%

                                            = 16.47%

(C). Inflation is the situation of increase in the general price level of the goods and services produced by the economy.

Here the price level rise by 2.50%, the inflation become 2.50%

(D). Real GDP Growth = Nominal GDP growth – Inflation

                                     = 22.22% - 2.50%

                                    = 19.72%

(E). Per Capita GDP Growth = Nominal GDP growth – Population Growth

                                              = 22.22% - 3.25%

                                              = 18.97%

(F) Real per capita GDP Growth = Real GDP growth - Population Growth

                                                    = 19.72% - 3.25%

                                                    = 16.47%