Given the following data for the economy of Sinlandia: (a)Nominal GDP 1985 =$165

Question

Given the following data for the economy of Sinlandia:
(a)Nominal GDP 1985 =$165b
(b)Nominal GDP 1995 =$185
(c)GDP deflator 1985 =95
(d)GDP deflator 1995=120
(e)Population 1985= 8m
(f)Population 1995 = 6m
(g)Capital Consumption Allowances 1995=$10b
(h)Savings 1985=$85b
(i)Savings 1995 =$75b
(j)Subsidies 1995=$6b
(k)Indirect taxes =$2.5b
(l)Net factor payments from abroad 1985=-$35b
(m)Net factor payments from abroad 1995=$65b

Using the data provided above, calculate the following:
a. Calculate the growth rate of nominal GDP and constant GDP for the period 1985-1995
b. Calculate the growth rate of nominal GDP and constant GDP per capita for the period 1985-1995
c. What is the current GNP in 1985 and 1995?
d.   Calculate the growth rate of nominal GNP and constant GNP per capita for the period 1985-1995

Explanation / Answer

a. Constant GDP = (Nominal GDP/GDP deflator)*100

Constant GDP of 1985 = (165/95)*100 = $173.68

Constant GDP of 1995 = (185/120)*100 - 154.16

Nominal GDP growth rate = {(Nominal GDP1995-Nominal GDP1985)/Nominal GDP 1985}*100

(185-165/165)*100 = 2000/165 = 12.12%

COnstant GDP growth rate = {(ConstantGDP1995-ConstantGDP1985)/Constant GDP 1985}*100

(154.16-173.68/173.68)*100 = -1951.99/173.28 = -11.23%

b. Nominal Per capita Income of 1985 = Nominal GDP divided by Population = 165b/8m = $20625

Nominal Per capita of 1995 = 185b/6m = $30833.33

Growth rate = {(Nominal GDP per capita1995-Nominal GDP per capita1985)/Nominal GDP 1985}*100

(30833.33-20625/20625)100 = 49.49%

Real Per capita 1995 = 173680/8 = 22460

Real Per capita 1985 = 154166/6 = 25694.33

Growth rate = 22460-25694.33/25694.33*100 = -11.88%

c. Current GNP = GDP + Net factor income from abroad

for 1985 it is = 165+35 = $200 billion

For 1995, it is = 185+65 = 250 billion

d. Growth rate of nominal GNP = {(250-200)/200}*100 = 25%

Growth rate of constant GNP

Constant GNP of 1985 = 200/95*100= 210.52

Constant GNP of 1995 = 250/120*100 = 208.33

Growth rate = (208.33-210.52/210.52)*100 = -1.04%

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