Macro-economics

Mar 2017
89
3
Israel
Hello :)

Can you help me please about the next sentence:

In the last year, nominal GDP grew by 9.2% and prices grew by 5%, therefore, if there is no change in the size of the population, real per capita GDP will increase by 4%.

I didn't understand why real per capita GDP will increase by 4%.

Thanks! (And sorry for my bad english).
 

romsek

Math Team
Sep 2015
2,959
1,673
USA
Jeff can explain this further but

$\dfrac{1+0.092}{1+0.05}=1.04 \Rightarrow 4\% \text{ increase}$
 
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