Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 19

Equation 9-1 states that Real GDP per capita growth rate 5 Nominal GDP per capita growth rate 2 Inflation rate 2 Population growth rate. This equation is an approximation of the exact rate of growth of GDP per capita, and so it results in some errors when calculating this rate. However, the simplified equation is both easy to use and results in small error terms when inflation, nominal GDP growth, and population growth are low, and so it is a useful approximation. Table 9P-2 lists a fictional country's nominal GDP, real GDP, GDP deflator, and population over two years.
a. Use your knowledge from "The Cost of Living" chapter to verify that the real GDP figures in Table 9P-2 are accurate.
b. Calculate this country's real GDP per capita for both 2012 and 2013.
c. Calculate the growth rate in this country's real GDP per capita between 2012 and 2013.
d. Calculate the growth rates in the nominal GDP, GDP deflator, and the population.