calculating economic growth. the formula for calculating % change in real gdp is the following %...
TRANSCRIPT
![Page 1: Calculating economic growth. The formula for calculating % change in real GDP is the following % change in real GDP = final value of real GDP – initial](https://reader036.vdocuments.net/reader036/viewer/2022081816/56649ea95503460f94bad9f8/html5/thumbnails/1.jpg)
Calculating economic growth
![Page 2: Calculating economic growth. The formula for calculating % change in real GDP is the following % change in real GDP = final value of real GDP – initial](https://reader036.vdocuments.net/reader036/viewer/2022081816/56649ea95503460f94bad9f8/html5/thumbnails/2.jpg)
The formula for calculating % change in real GDP is the following
% change in real GDP = final value of real GDP – initial value of real GDP (x100)
÷ initial value of GDP
![Page 3: Calculating economic growth. The formula for calculating % change in real GDP is the following % change in real GDP = final value of real GDP – initial](https://reader036.vdocuments.net/reader036/viewer/2022081816/56649ea95503460f94bad9f8/html5/thumbnails/3.jpg)
… For example
• If an economy had real GDP of…• $75.3billion in 2010 • …and $81.7billion in 2011• How much did Real GDP grow?
81.7 – 75.3 (x100)÷
73.3 = 8.73%
![Page 4: Calculating economic growth. The formula for calculating % change in real GDP is the following % change in real GDP = final value of real GDP – initial](https://reader036.vdocuments.net/reader036/viewer/2022081816/56649ea95503460f94bad9f8/html5/thumbnails/4.jpg)
Page 295
Question 4a.)
• If an economy had real GDP of…• $1579 in 2007 • $ 1611 in 2008• $1597 in 2009a.) How much did the economy 2007 -2008 grow?
1611 – 1579 (x100)÷ 1579 = 2.03% Growth
![Page 5: Calculating economic growth. The formula for calculating % change in real GDP is the following % change in real GDP = final value of real GDP – initial](https://reader036.vdocuments.net/reader036/viewer/2022081816/56649ea95503460f94bad9f8/html5/thumbnails/5.jpg)
Page 295
Question 4b.)
• If an economy had real GDP of…• $1579 in 2007 • $ 1611 in 2008• $1597 in 2009b.) How much did the economy 2008 -2009 grow?
1597-1611 (x100)÷ 1611 = -0.87% Growth
![Page 6: Calculating economic growth. The formula for calculating % change in real GDP is the following % change in real GDP = final value of real GDP – initial](https://reader036.vdocuments.net/reader036/viewer/2022081816/56649ea95503460f94bad9f8/html5/thumbnails/6.jpg)
4C.) When did the economy experience negative growth?
• The economy experienced negative growth of 0.87% between 2008 and 2009
• This means to say that the economy contracted by approximately 1%
• Recession!!!
![Page 7: Calculating economic growth. The formula for calculating % change in real GDP is the following % change in real GDP = final value of real GDP – initial](https://reader036.vdocuments.net/reader036/viewer/2022081816/56649ea95503460f94bad9f8/html5/thumbnails/7.jpg)
Page 295
Question 5 – How is it possible that country can have positive real GDP growth and yes have negative real GDP per capita?
• it will all depend on how fast the population is growing
• If real GDP grows faster than population then the per capita GDP level will increase too.
• However if population increases faster than real GDP then the per capita GDP on average decreases
![Page 8: Calculating economic growth. The formula for calculating % change in real GDP is the following % change in real GDP = final value of real GDP – initial](https://reader036.vdocuments.net/reader036/viewer/2022081816/56649ea95503460f94bad9f8/html5/thumbnails/8.jpg)
If we know the % change in real GDP and the percentage change in the population, we can find the % change in Real GDP per
capital simply
% change in real GDP per capita = % change in real GDP – % change in population
![Page 9: Calculating economic growth. The formula for calculating % change in real GDP is the following % change in real GDP = final value of real GDP – initial](https://reader036.vdocuments.net/reader036/viewer/2022081816/56649ea95503460f94bad9f8/html5/thumbnails/9.jpg)
Page 295
Question 6Suppose that an economy’s real GDP grew by 2.2% in 2007, and it’s population grew by 1.5% during the same year. By how much did its real GDP per capita grow?
2.2% - 1.5% = 0.7%