Question

Question 6: Per capita real GDP is given by the equation y = Y/PN, where Y is nominal GDP, P is the GDP deflator, and N is population. In the United States, if the average growth rate of nominal GDP is 2.8 percent, inflation is 1.6 percent, and population growth is 0.5 percent, what is the growth of real GDP? Growth of per capita nominal GDP? Growth of per capita real GDP?

Answer 1

Real GDP growth = Nominal GDP Growth - Inflation

Real GDP growth = 2.8 - 1.6

Real GDP growth = 1.2%

Therefore, the real GDP growth is 1.2%

Per-capita nominal GDP Growth = Nominal GDP Growth rate - Population Growth

Per-capita nominal GDP Growth = 2.8 - 0.5

Per-capita nominal GDP Growth = 2.3%

Therefore, the per capita nominal GDP Growth is 2.3%

Per capita Real GDP Growth = GDP Growth rate - Inflation - Population Growth

Per capita Real GDP Growth = 2.8 - 1.6 - 0.5

Per capita Real GDP Growth = 0.7%

Therefore, the Per capita Real GDP Growth is 0.7%