3. What is the average annual growth rate for each country? Growth rate- (Valuen

Question

3. What is the average annual growth rate for each country? Growth rate- (Valuenew- Valueold)/Valueold Real valuu Data Egypt Gatar 1997 81.6 N/A 1999 12.4 2011 231.1 169.8 GDP (billions of nominal US dollars) Egypt Qatar 1997 120.5 N/A 1999 N/A 44.5 2011 147.4 GDP Deflator Implicit Price Index Source: World Bank national accounts data, and OECD National Accounts data files. 1. What is the 1997 GDP for Egypt converted to 2011 dollars? $ 120.4 2. what is the 1999 GDP for Qatar converted to 2011 dollars? $ | 4882 3. What is the average annual growth rate for each country. | o Egypt: | 12.9 |X% Qatar: | 1.1 |×%

Explanation / Answer

(1)

Required GDP ($ Billion) = Egypt's GDP in 1997 x (Egypt's GDP Deflator in 2011 / Egypt's GDP Deflator in 1997)

= 81.6 x (177.8 / 120.5)

= 120.4

(2)

Required GDP ($ Billion) = Qatar's GDP in 1999 x (Qatar's GDP Deflator in 2011 / Qatar's GDP Deflator in 1997)

= 12.4 x (147.4 / 44.5)

= 41.1

(3) Let average annual growth rate be R% per year.

(A) For Egypt, number of years (between 1997 and 2011) = 14

$81.6 Billion x (1 + R)14 = $231.1 Billion

(1 + R)14 = 231.1 / 81.6 = 2.8321

Taking 14th root on each side,

1 + R = 1.077

R = 0.077

R = 7.7%

(B) For Qatar, number of years (between 1999 and 2011) = 12

$12.4 Billion x (1 + R)12 = $169.8 Billion

(1 + R)12 = 169.8 / 12.4 = 13.6935

Taking 12th root on each side,

1 + R = 1.244

R = 0.244

R = 24.4%

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