The annual rate of growth of real GDP in a developing nation is 0.3 percent. Ini

Question

The annual rate of growth of real GDP in a developing nation is 0.3 percent. Initially, the countries population was stable from year to year. Recently, however, a significant increase in the nation's birth rate has raised the annual rate of population growth to 0.5 percent. Answer the following:

1. What was the rate of growth of per capita real GDP before the increase in population growth?

2. If the rate of growth of real GDP remains unchanged, what is the new rate of growth of per capita real GDP following the increase in the birthrate?

Explanation / Answer

a)

Growth rate of GDP = 0.3%

Growth rate of population = 0%

Growth rate of per capita GDP = Growth rate of GDP – Growth rate of population

Growth rate of per capita GDP = 0.3% – 0%

Growth rate of per capita GDP = 0.3%

b)

Growth rate of GDP = 0.3%

Growth rate of population = 0.5%

Growth rate of per capita GDP = Growth rate of GDP – Growth rate of population

Growth rate of per capita GDP = 0.3% – 0.5%

Growth rate of per capita GDP = -0.2%

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