During a presidential campaign, the incumbent argues that he should be reelected because nominal GDP grew by 12 percent during his 4-year term in office. You know that population grew by 4 percent over the period and that the GDP deflator increased by 6 percent during the past 4 years. You should conclude that real GDP per person

Question

Quizplus · Accepted Answer

Real GDP growth adjusts for inflation and is calculated by subtracting the inflation rate (GDP deflator increase) from the nominal GDP growth rate. Here, real GDP growth = 12% - 6% = 6%. To find the per capita growth, we also adjust for population growth: 6% - 4% = 2%. Therefore, real GDP per person grew, but by less than 12%.

During a Presidential Campaign, the Incumbent Argues That He Should