Question

Suppose that nominal GDP was $9000000.00 in 2005 in Montgomery County Maryland. In 2015, nominal GDP was $11250000.00 in Montgomery County Maryland. The price level rose 1.50% between 2005 and 2015, and population growth was 3.25%. Calculate the following figures for Montgomery County Maryland between 2005 and 2015. Give all answers to two decimals.

a. Nominal GDP growth was _____%

b. Economic growth was ______%

c. Inflation was ______%

d. Real GDP growth was _______%

e. Per capita GDP growth was _______%

f. Real per capita GDP growth was ______%

Answer 1

Ans.

a) Nominal GDP ( growth ) = (11250000 - 9000000 / 9000000 ) x 100

                                            = 2,250,000 / 9,000,000 x 100

                                           = 0.25 x 100 = 25%

b) Economic growth = Nominal GDP - rise in price level - population growth

                                 = 25% - 1.5% - 3.25% = 20.25%

c)Inflation = rise in price level

                 = 1.5%

d) Real GDP ( growth ) = Nominal GDP - rise in price level

                                      = 25% - 1.5 % = 23.5%

e) Per Capita GDP Growth = Nominal GDP - population growth

                                            = 25% - 3.25% = 21.75%

f) Real Capital Growth rate = Nominal GDP - rise in price level - population growth

                                            = 25% - 1.5% - 3.25% = 20.25%

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