Question

Okay

2. Obtain data on Real GDP and population growth rate of a country of your choice (be careful while picking a country as not all countries have good data base. Certainly the OECD countries do have better data base) and plot them in a single graph. Analyze your graph in terms of the living standard of the country. Provide economic intuition while analyzing the graph. Focus on the growth differences between the two variables and its implication

*.(((country of your choice / Saudi Arabia))

Answer 1

Growth is sustained increase in national output or GDP per capita of the country from one period to another. The growth rate of GDP per capita is given as

The GDP per capita is the GDP per unit of population. The sustained growth in GDP per capita can only be achieved if growth in GDP is outweighed by the growth in population. If growth in population decreases, it would imply increase in GDP per capita and vice varsa. This means the average income of the economy will rise. As income is the measure of standard of living, higher average income means higher standard of living.

The data on Real GDP and population growth rate of Saudi Arabia is given in the figure below

From the graph it is evident that at times the population growth rate lies below real GDP growth rate and sometimes above it. The difference between the two curve denotes the real GDP per capita. The positive difference means growth in real GDP per capita and the negative difference denotes fall in real GDP per capita and standard of living.