Q1. Economic growth basics The real GDP and population data for two hypothetical
ID: 1151570 • Letter: Q
Question
Q1. Economic growth basics
The real GDP and population data for two hypothetical countries, Panchal and Mithila, for the years 2011 and 2012 are given as follows. [ANSWER OPTIONS ARE IN BOLD]
Q1 OPTIONS [ $3,264,000 / $3,459,840 / $195,840 / $6,723,840 ]
Q2 OPTIONS: [ $16,840,000 / $17,345,200 / $34,185,200 / $505,200]
Q3 OPTIONS: [ 23 / 12 / 8 ] YEARS
Q4 OPTIONS: [ 4 / 12 / 23 ] YEARS
Q5 OPTIONS: [ $11 / $560 / $16 ]
Q6 OPTIONS: [ $16 / $1,1134 / $11]
1. Economic growth basics The real GDP and population data for two hypothetical countries, Panchal and Mithila, for the years 2011 and 2012 are given as follows Panchal $3,264,000 6,000 $3,459,840 6,180 Mithila $16,840,000 15,000 Real GDP (2011) Population (2011) Real GDP (2012) $17,345,200 Population (2012) 15,300 Between the years 2011 and 2012, the absolute real economic growth for Panchal is .Similarly, the absolute real economic growth for Mithila is The percentage change in real GDP between two years may be calculated using this formula: rcentage Change in Real in Real G Real GDP in Year 70 The rule of 70 states that if a variable grows at X% per year, then it will take aboutyears for the variable to double For Panchal and Mithila, the absolute real economic growth rates (percentage change in real GDP) are 6% and 3%, respectively. If these rates of growth are sustained over a long period of time, it will take approximately ? years for the real GDP of Panchal to double. On the other hand, it will take Mithila approximatelyyears The per-capita real economic growth between 2011 and 2012 for Panchal is Similarly, per-capita real economic growth for Mithila isExplanation / Answer
Q1 Real GDP in 2012 minus Real GDP in 2011= $3,459,840 - $3,264,000= $195,840.( Panchal)
Q2 Real GDP in 2012 minus Real GDP in 2011= $17,345,200 - $16,840,000= $505,200.(Mithila)
Percentage change in real GDP (Panchal)
(Real GDP in 2012 - Real GDP in 2011)/ Real GDP in 2011=
($3,459,840 - $3,264,000)/$3,264,000=$195,840/$3,264,000= 6%
Percentage change in real GDP (Mithila)
(Real GDP in 2012 - Real GDP in 2011)/ Real GDP in 2011=
($17,345,200 - $16,840,000)/$16,840,000=$505,200/$16,840,000=3%
Q3
Rule of 70
(Panchal) = 70/annual growth rate = 70/6%= 12 years for real GDP to double.
Q4
(Mithila) = 70/annual growth rate = 70/3%= 23 years for real GDP to double.
Q5 Panchal
Per capita real GDP in 2011=$3,264,000/6000= $544
Per capita real GDP in 2012=$3,459,840/6180=$559.84
Increase in per-capita economic growth = $559.84-$544=$16 ( approximately).
Mithila
Per capita real GDP in 2011=$16,840,000/15000= $1122.66
Per capita real GDP in 2012=$17,345,200/15300=$1133.67
Increase in per-capita economic growth = $1122.66-$1133.67=$11 ( approximately).
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