Question

Nation A's real GDP increased from $100 billion to $106 billion from 2010 to 2011. Nation A's population grew from 50 million to 51 million from 2010 to 2011. As a result real GDP per capita ___________, because real GDP increased at a _________ rate than the population:

Answer 1

Answer:

The correct answer is: Increased; faster

Explanation:

For nation A, in the year 2010, the real GDP was $100 billion and the population was 50 million.

In the year 2011, the real GDP increased to $106 billion and the population increased to 51 million.

The increase in real GDP is $6 billion and the increase in population is 1 million.

Real GDP per capita in 2010

= $\frac{100}{0.05}$

= $2,000

Real GDP per capita in 2011

= $\frac{106}{0.051}$

= $2,078.43

So, the real GDp per capita has increased.

The rate of increase in real GDP

= $\frac{6}{106}\times 100$

= 5.66%

The rate of increase in population

= $\frac{1}{51}\times 100$

= 1.96%

So, we see that real GDP is growing at a faster rate.