Question

	A		B
GDP ($millions)	1000000	1050400	250000	288000
population (millions)	20	20.2	50	60
GDP/pop ($thousands)	__	__	__	__

Economy A is a developed economy while B is a developing economy. Both are observed above at two points in time.

a)Which economy is bigger?

b)Which economy grew? (both, neither, A, B)

2)Which economy added more output?

3)Which economy had greater percentage growth?Which has more people?

4)Which population grew? (both, neither, A, B)

a)Which population had greater percentage growth?

b)Which had GDP per capita growth? (both, neither, A, B)

c)Which had more per capita?

Answer 1

(1)

(a) Since country A has higher GDP in both years, country A is bigger.

(b) Since both economies registered an increase in GDP, both economies grew.

(2) country A

Increase in GDP/output, country A ($) = 1,050,400 - 1,000,000 = 50,400

Increase in GDP/output, country B ($) = 288,000 - 250,000 = 38,000

Since Increase in GDP/output is higher in country A, this country added more output.

(3) Country B

% Increase in GDP/output, country A = (1,050,400 / 1,000,000) - 1 = 1.0504 - 1 = 0.0504 = 5.04%

% Increase in GDP/output, country B = (288,000 / 250,000) - 1 = 1.152 - 1 = 0.152 = 15.2%

Country B has higher % growth and also has higher population in both years.

(4) Both

There is increase in population for both countries.

(a) Country B

% increase in population, country A = (20.2 / 20) - 1 = 1.01 - 1 = 0.01 = 1%

% increase in population, country B = (60 / 50) - 1 = 1.2 - 1 = 0.2 = 20%

(b) Country A

GDP per capita = GDP / Population

GDP per capita, Country A, year 1 = (1,000,000 / 20) = $50,000

GDP per capita, Country A, year 2 = (1,050,400 / 20.2) = $52,000

% growth = ($52,000 / $50,000) - 1 = 1.04 - 1 = 0.04 = 4%

GDP per capita, Country B, year 1 = (250,000 / 50) = $5,000

GDP per capita, Country B, year 2 = (288,000 / 60) = $4,800

% growth = ($4,800 / $5,000) - 1 = 0.96 - 1 = -0.04 = -4%

(c) In both years, country A had higher GDP per capita.