Nation A's real GDP was $520 billion in 2013 and $550 billion in 2014. Its population was 150 million in 2013 and 155 million in 2014. On the other hand, Nation B's real GDP was $200 billion in 2013 and $210 billion in 2014; and its population was 53 million in 2013 and 55 million in 2014. Which of the following statements is true?

Question

Quizplus · Accepted Answer

To calculate the real GDP growth rates, we need to use the formula:

Real GDP growth rate = (Real GDP in current year - Real GDP in previous year) / Real GDP in previous year

For Nation A: 
Real GDP growth rate in 2014 = (550 - 520) / 520 = 0.0577 or 5.77%

For Nation B: 
Real GDP growth rate in 2014 = (210 - 200) / 200 = 0.05 or 5%

Therefore, Nation A's real GDP growth in 2014 is higher than Nation B's, and the correct answer is A.

Nation A's Real GDP Was $520 Billion in 2013 and $550