Growth Rates

Slides By

John Dawson and Kevin Brady

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Material from this presentation can be found in:

Chapter 16

CoreEconomics, 2e

Growth Rates

Question 1:

After conquering the academic world, you went on to start your own country! The partially completed table below shows some GDP statistics from your country. Change the letters A-E in the table to the appropriate numbers.

Year GDP (in billions) GDP Deflator (2080 = 100)

Real GDP (in billions of 2080 dollars

Population (in millions)

Real GDP per Capita

(in 2080 dollars

2030 90 30 A 10 30,000

2040 100 40 250 9.5 B

2050 C 60 416.7 12 34,725

2060 450 70 642.9 D 42,860

2070 600 E 666.7 16 41,669

2080 800 100 800 18 44,444

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Answer

Growth Rates

Answer to Question 1:

After conquering the academic world, you went on to start your own country! The partially completed table below shows some GDP statistics from your country. Change the letters in the table to the appropriate numbers.

Letter A: To find the real GDP, we must convert the nominal GDP using the GDP deflator.

Real GDP = Nominal GDP x (Base Year Index / Current Year Index)

Real GDP = $90 billion x (100 / 30) = $300 billion

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AnswerBack to Table

Growth Rates

Answer to Question 1:

After conquering the academic world, you went on to start your own country! The partially completed table below shows some GDP statistics from your country. Change the letters in the table to the appropriate numbers.

Letter A: To find the real GDP, we must convert the nominal GDP using the GDP deflator.

Real GDP = Nominal GDP x (Base Year Index / Current Year Index)

Real GDP = $90 billion x (100 / 30) = $300 billion

Letter B: To find the real GDP per capita, we must divide the real GDP by the population.

Real GDP per Capita = $250 billion / 9.5 million = $26,316

Interactive Examples

AnswerBack to Table

Growth Rates

Answer to Question 1:

After conquering the academic world, you went on to start your own country! The partially completed table below shows some GDP statistics from your country. Change the letters in the table to the appropriate numbers.

Letter A: To find the real GDP, we must convert the nominal GDP using the GDP deflator.

Real GDP = Nominal GDP x (Base Year Index / Current Year Index)

Real GDP = $90 billion x (100 / 30) = $300 billion

Letter B: To find the real GDP per capita, we must divide the real GDP by the population.

Real GDP per Capita = $250 billion / 9.5 million = $26,316

Letter C: To find the nominal GDP, we can use the formula used to solve for Letter A above.

Real GDP = Nominal GDP x (Base Year Index / Current Year Index)

$416.7 billion = Nominal GDP X (100 / 60)

$416.7 billion = (10/6) x Nominal GDP Thus, Nominal GDP = $250 billion

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AnswerBack to Table

Growth Rates

Answer to Question 1:

After conquering the academic world, you went on to start your own country! The partially completed table below shows some GDP statistics from your country. Change the letters in the table to the appropriate numbers.

Letter D: To find the population, we can use the real GDP per capita formula from the solution to Letter B.

Real GDP per Capita = Real GDP / Population

$42,860 = $642.9 billion / Population Solving for the population, we find it was 15 million.

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AnswerBack to Table

Growth Rates

Answer to Question 1:

After conquering the academic world, you went on to start your own country! The partially completed table below shows some GDP statistics from your country. Change the letters in the table to the appropriate numbers.

Letter D: To find the population, we can use the real GDP per capita formula from the solution to Letter B.

Real GDP per Capita = Real GDP / Population

$42,860 = $642.9 billion / Population Solving for the population, we find it was 15 million.

Letter E: To find what the GDP deflator was in 2070, we can use the following formula:

Real GDP = Nominal GDP x (Base Year Index / Current Year Index)

$666.7 billion = $600 billion x (100 / Current Year Index)

Solving for the Current Year Index, which is the GDP deflator in 2070, we find that it was 90.

The completed table is on the next slide.

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AnswerBack to Table

Growth Rates

Year GDP (in billions) GDP Deflator (2080 = 100)

Real GDP (in billions of 2080 dollars

Population (in millions)

Real GDP per Capita

(in 2080 dollars

2030 90 30 300 10 30,000

2040 100 40 250 9.5 26,316

2050 250 60 416.7 12 34,725

2060 450 70 642.9 15 42,860

2070 600 90 666.7 16 41,669

2080 800 100 800 18 44,444

Question 1: Completed Table

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