Question

Part 1   (1 point)

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Suppose that nominal GDP was $9250000.00 in 2005 in Orange County California. In 2015, nominal GDP was $11000000.00 in Orange County California. The price level rose 1.50% between 2005 and 2015, and population growth was 4.25%. 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

Solution:-

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

Nominal GDP growth = (11000000 – 9250000) / 9250000 * 100

                                   = 18.91%.

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

                                            = 18.91% - 1.50% - 4.25%

                                            = 13.16%

(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 1.50% the inflation become 1.50%

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

                                     = 18.91% - 1.50%

                                    = 17.41%

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

                                              = 25% - 4.25%

                                              = 14.66%

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

                                                    = 17.41% - 4.25%

                                                    = 13.16