Question

9. Using the following information for a U.S. state:

           Nominal GDP                    Real GDP                              Population                            Year

           (millions)                            (millions 2009 $’s)                               

                    1,151,119                          1,421,713                              32,987,911                           1998       

                    1,879,520                          1,975,457                              36,020,878                           2006

                    2,350,807                          2,143,167                              38,792,459                           2014

                                                

What is the average annual growth rate for this state during the time periods listed? (GDP per capita)

       (Note: time periods of interest are 1998-2006 & 2006-2014)

What is the average annual inflation rate for this state during the time periods listed?

To what extent are living standards likely changing in this economy? Explain and support your

       claim using evidence from the above table.

                       d.    For 1 bonus point, indicate the U.S. state associated with the above data.

Answer 1

The living standard from 1998 to 2006 is going to increase because here the annual average per capita GDP growth rate (3.05%) is higher than average annual growth rate of inflation (2.03%). But from 2006 to 2014 the average annual growth of per capita GDP is less than growth rate of annual average inflation rate. In this period standard of living is going to fall.