Macro-economics

Mar 2017
89
3
Israel
Hello :)

Can you help me please about the next exercise:

The nominal GDP of the economy has increased by 16% in the last decade, the population has increased by 11%, and the price index has increased by 3%.
What is the value of real GDP per capita?

I just know that real GDP (not per capita) is 1.16/1.03, but it's my first (or second, I'm not sure) question about real GDP per capita and increasing of population, so I don't really know how to solve this.

Thanks!
 
May 2016
1,310
551
USA
Hi Ilan

The question is not well posed. (I know you probably translated it so that is not surprising, but it means I am not 100% sure that I can answer your question exactly.)

Suppose the nominal gdp, real gdp, population, and real gdp per capita are each indexed at 100 as of a decade ago.

Thus, if I understand the question, the index for nominal gdp now stands at 116 and the price index currently stands at 103. That implies that real gdp has an index of

$\dfrac{116}{103} * 100 \approx 112.62$

The population index is currently 111.

So the index of real gdp per capita is

$\dfrac{100 * \dfrac{116}{103}}{111} * 100 \approx 101.46.$

Now that is plausible and can be checked mentally as follows.

116 relative to 100 is a 16% increase. 103 relative to 100 is a 3% increase.
So real gdp increased about 13%. Population increased by 11%. So population per capita increased about 2%.
 
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Mar 2017
89
3
Israel
Hi Ilan

The question is not well posed. (I know you probably translated it so that is not surprising, but it means I am not 100% sure that I can answer your question exactly.)

Suppose the nominal gdp, real gdp, population, and real gdp per capita are each indexed at 100 as of a decade ago.

Thus, if I understand the question, the index for nominal gdp now stands at 116 and the price index currently stands at 103. That implies that real gdp has an index of

$\dfrac{116}{103} * 100 \approx 112.62$

The population index is currently 111.

So the index of real gdp per capita is

$\dfrac{100 * \dfrac{116}{103}}{111} * 100 \approx 101.46.$

Now that is plausible and can be checked mentally as follows.

116 relative to 100 is a 16% increase. 103 relative to 100 is a 3% increase.
So real gdp increased about 13%. Population increased by 11%. So population per capita increased about 2%.
I'm very sorry :eek:, there were some English words which I didn't know/remember. I would explain to you, but you already answered my question, so thanks a lot!
 
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