Question

If real GDP per capita in a country were $14,000 in year 1 and $14,280 in year 2, then the economic growth rate for this country from year 1 to year 2 was:

Answer 1

Given:

Real GDP per capita in a country in

• Year 1 - $14,000
• Year 2 - $14,280

To find:

Economic growth rate from Year 1 to Year 2

Solution:

The real economic growth rate, is the measure of the economic growth as it corresponds to the Gross Domestic Product from one particular period to the other, and is expressed in real terms as opposed to nominal terms.

$\Rightarrow\text{Economic Growth Rate }=\frac{\text{Year 2 - Year 1}}{\text{Year 1}}\times100\rightarrow\frac{14280-14000}{14000}\times100\\\\ \Rightarrow\text{Economic Growth Rate }=\frac{280}{14000}\times100\rightarrow0.02\times100\rightarrow2\%$

Therefore, the economic growth rate from year 1 to year 2 is 2%.