Question

Year	Nominal GDP	Economic Growth	Workers	GDP Deflator	Capital	Population	CPI	M1	Inflation (with GDP Deflator)
2019	$22,000,000	2.10%	100	110	20,000,000	200	300	$4,000,000	1.10%
2069	$384,000,000	2.80%	150	320	60,000,000	300	1200	$40,000,000	2.90%

From the numbers in the table, and your last question, what led to the increase in real per capital GDP between 2019 and 2069. Was it an increase in the fraction of the population working, growth in labor productivity, or a combination of both of these? Please show your calculations and include an explanation.

Answer 1

	READ GDP=	NOMINAL GDP/GDP DEFLATOR
	REAL GDP	WORKERS	LABOR PRODUCTIVITY	POPULATION
2019	18,181,818.18	100	181,818.18	200
2069	120,000,000.00	150	800,000.00	300
% increase	560.00	50	340.00	50

REAL GDP = 22,000,000/ (110/100)

REAL GDP = 120,000,000/(320/100)

First , calculate the Real GDP using the formula provided.

Th population increased by 50% and so did the number of workers.

Labor Productivity = Real GDP/ Workers. The value implies that each worker is able to produce good and services worth $181,818 in 2019 and in 2065 it increased to $800,000 which is a 340% increase.

From the above calculations it can said that the 560% in the REAL GDP can be attributed to both an increase in the population and the improvement in the labor productivity.