Two countries, A and B, have different growth rates of GDP,inflation, and popula

Question

Two countries, A and B, have different growth rates of GDP,inflation, and population. Country A's GDP grew by 7% fromyear 1 to year 2. Country B's GDP grew by 5% during the sametime. Inflation in Country A was 4% and in Country B it was3%. During the same period, population grew by 3% in CountryA and by 1% in country B. Determine and explain (A) which country has the highest growthrate of real GDP and (B) which country has the highest growth rateof real GDP per capita. Two countries, A and B, have different growth rates of GDP,inflation, and population. Country A's GDP grew by 7% fromyear 1 to year 2. Country B's GDP grew by 5% during the sametime. Inflation in Country A was 4% and in Country B it was3%. During the same period, population grew by 3% in CountryA and by 1% in country B. Determine and explain (A) which country has the highest growthrate of real GDP and (B) which country has the highest growth rateof real GDP per capita.

Explanation / Answer

A. The highest growth rate of real GDP goes to Country A. The rateof inflation for Country A was 7%, thus the real growth rate was6.73 percent (7/1.04). For Country B, the real rate was 4.85(5/1.03). B. It's not possible to answer this question. Why? Because you needto know the population of each country. Per capita means perperson.

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