Connect Problem CP 89 algo Consider the following data for t

Connect Problem CP 8-9 (algo) Consider the following data for the country below. Population,Year| Real dDP per Capita, Year 11 and Year Inflation Rate (%) Gowth Rate Real (%),Year | GDP 1 to 2 (Millions) 200 Year 2 $70,000 Instructions: In part a, enter your answer as a whole number. In part b, round your answer to 2 decimal places a. What is real GDP per capita in year 2? s74900 o b. What is real GDP in year 2? $4980 tillion

Solution

Real GDP in Year 1 = Real GDP per capita in Year 1 * Population in Year 1

Real GDP in Year 1 = $70,000 * 200 million

Real GDP in Year 1 = $14 trillion

Growth rate of real GDP = 7% or 0.07

Calculate the Real GDP in Year 2 -

Real GDP in Year 2 = Real GDP in Year 1 + (Real GDP in Year 1 * Growth rate of real GDP)

Real GDP in Year 2 = $14 trillion + ($14 trillion * 0.07)

Real GDP in Year 2 = $14 trillion + $0.98 trillion = $14.98 trillion

Calculate the Real GDP per capita in Year 2 -

Real GDP per capita in Year 2 = Real GDP in Year 2/Population in Year 2 = $14.98 trillion/200 million = $74,900

So,

(a)

The real GDP per capita in Year 2 is $74,900.

(b)

The real GDP in Year 2 is $14.98 trillion.