Question

In $2018$, a nation's population was 10 million. Its nominal GDP was $\backslash (40$billion, and its price index was $100$. In$2019$, its population had increased to $12$million, its nominal GDP had risen to$\backslash )57.6$billion, and its price index had increased to $120$. What was this nation's economic growth rate during the year?

Short answer

Nation's economic growth rate during the year is$120\%$.

Step-by-step solution

Calculation for GDP real

In the base year of$2014$, nominal GDP was $\$40$billion. In $2015$, the nominal GDP with price index $120$was $\$57.6$billion.

The following formula can be used to determine the real GDP in$2015$:

$\mathrm{GDP}\left(\text{real}\right)=\frac{\mathrm{GDP}\left(\text{nominal}\right)}{\text{price index}}\times 100$

$\mathrm{GDP}\left(\mathrm{real}\right)=\frac{\$57.6\mathrm{billion}}{120}\times 100$

$\mathrm{GDP}(\mathrm{real})=\$48\mathrm{billion}$

Calculation for growth rate

From $2014$to $2015$,.

Growth rate ,

$=\$48\mathrm{billion}\times \left(\frac{100}{\$40\mathrm{billion}}\right)$

$=120\%$