Consider a country with a nominal gross domestic product (GDP)of $5 billion in 2010 and $15 billion in 2015.In the same period the population grew by 10 percent and price levels increased by 90 percent.What is the economic growth for this country?

Question

Quizplus · Accepted Answer

Economic growth is measured by the change in real GDP. First, adjust the 2015 nominal GDP for inflation: $15 billion / 1.9 (90% increase in price level) = $7.89 billion. Then, calculate the real GDP growth: ($7.89 billion - $5 billion) / $5 billion = 0.578 or 57.8%. Adjust for population growth: 57.8% / 1.1 (10% population growth) = 52.5%. Therefore, the economic growth is approximately 100%.

Consider a Country with a Nominal Gross Domestic Product (GDP)of