Question

1. Calculate the missing values:

1. (5pts) Nominal and real interest rates. Provide your calculations.

Real Interest Rate	Nominal Interest Rate	Inflation
2		6
	15	10
8	13

2. (10 pts) Per capita GDP: Using the following data, organize from the largest to smallest, according the rate of growth of GDP per capita in each year. Explain your answer. (5pts)

   	Year	Australia	Belgium	Brazil	Colombia	France	Japan	United States
   GDP growth (annual %)	2013	2.44	0.02	2.74	4.94	0.66	1.61	2.22
   	2014	2.50	1.35	0.14	4.55	0.18	-0.10	2.39
   Population growth (annual %)	2013	1.89	0.53	1.23	1.35	0.73	0.46	0.96
   	2014	1.72	0.42	1.19	1.31	0.72	0.41	0.95

Answer 1

(a)
Real interest rate = nominal interest rate - inflation rate.

Nominal interest rate = Real interest rate + inflation rate

Inflation rate = Nominal interest rate - real interest rate.

Real interest rate	Nominal interest rate	Inflation rate
2	8	6
5	15	10
8	13	5

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(b)

GDP per capita = (GDP / Population)

=>GDP per capita = GDP growth rate - Population growth rate.

	Year	Australia	Belgium	Brazil	Colombia	France	Japan	United States
GDP Growth rate (annual %)	2013	2.44	0.02	2.74	4.94	0.66	1.61	2.22
2014	2.5	1.35	0.14	4.55	0.18	-0.1	2.39
Population growth (annual %)	2013	1.89	0.53	1.23	1.35	0.73	0.46	0.96
2014	1.72	0.42	1.19	1.31	0.72	0.41	0.95
GDP per capita growth (annual %)	2013	0.55	-0.51	1.51	3.59	-0.07	1.15	1.26
2104	0.78	0.93	-1.05	3.24	-0.54	-0.51	1.44

Year 2013 (largest to smallest in terms of GDP per capita growth)

• Columbia (3.59%)
• Brazil (1.51%)
• United States (1.26%)
• Japan (1.15%)
• Australia (0.55%)
• France (-0.07%)
• Belgium (-0.51%)

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Year 2014 (largest to smallest in terms of GDP per capita growth)

• Columbia (3.24%)
• United States (1.44%)
• Belgium (0.93%)
• Australia (0.78%)
• Japan (-0.51%)
• France (-0.54%)
• Brazil (-1.05%)