Question

Suppose that work hours in New Zombie are 300 in year 1 and productivity is $10 per hour worked. What is New Zombie’s real GDP? $ If work hours increase to 320 in year 2 and productivity rises to $12 per hour, what is New Zombie’s rate of economic growth? Instructions: Round your answer to two decimal places. Rate of growth = %

Answer 1

Answer: Rate of economic growth = 28%

Explanation:

In year 1,

Work hours in New Zombie = 300

Productivity = $10 per hour worked

Real GDP in the given year = Productivity × Work hours

                                             = $10 × 300

                                             = $3,000

In year 2,

Work hours in New Zombie = 320

Productivity = $12 per hour worked

Real GDP in the given year = Productivity × Work hours

                                             = $12 × 320

                                             = $3,840

Rate of economic growth = $\frac{Real\ GDP\ in\ year\ 2 - Real\ GDP\ in\ year\ 1}{Real\ GDP\ in\ year\ 1} \times100$

                                          =  $\frac{3,840 - 3,000}{3,000}\times100$

                                          = 28%