In 2009, the imaginary nation of Dorados had a population of 8,000 and real GDP of 3,000,000. During the year its real GDP grew by about 2.9%. Which of the following sets of growth rates is consistent with this growth in real GDP?
A)2% population growth and 6% real GDP growth
B)6% population growth and 2% real GDP growth
C)4% population growth and 7% real GDP growth
D)7% population growth and 4% real GDP growth

Question

Quizplus · Accepted Answer

We can use the formula to calculate the per capita real GDP growth rate, which is given by:

per capita real GDP growth rate = (real GDP growth rate - population growth rate)

Plugging in the numbers, we get:

per capita real GDP growth rate = 2.9% - 4% = -1.1%

This means that the population is growing faster than the economy, resulting in a decline in per capita real GDP.

Out of the given choices, only option C has a population growth rate higher than the real GDP growth rate, which is consistent with the negative per capita real GDP growth rate we calculated. Therefore, the answer is C.

In 2009, the Imaginary Nation of Dorados Had a Population