Question

In \(1980,\) Denmark had a GDP of 70 billion dollar (measured in U.S. dollars) and a population of 5.1 million. In 2000, Denmark had a GDP of 160 billion dollar (measured in U.S. dollars) and a population of 5.3 million. By what percentage did Denmark's GDP per capita rise between 1980 and \(2000 ?\)

Short answer

In 1980, Denmark's GDP per capita was \(\frac{70 \: billion}{5.1 \: million} = 13,725.49\) dollars. In 2000, Denmark's GDP per capita was \(\frac{160 \: billion}{5.3 \: million} = 30,188.68\) dollars. The change in GDP per capita between 1980 and 2000 is \(30,188.68 - 13,725.49 = 16,463.19\) dollars. The percentage increase in Denmark's GDP per capita between 1980 and 2000 is \(\frac{16,463.19}{13,725.49} \times 100 = 119.95 \% \).

Step-by-step solution

Calculate the GDP per capita for 1980 and 2000

First, we need to start by calculating the GDP per capita for each given year. We can do this by dividing the given GDP value by the given population value. For 1980: GDP per capita = \(\frac{GDP}{Population}\) For 2000: GDP per capita = \(\frac{GDP}{Population}\)

Determine the change in GDP per capita between 1980 and 2000

After calculating the GDP per capita for each year, we need to determine the change between the two numbers. We will do this using the formula: Change in GDP per capita = GDP per capita in 2000 - GDP per capita in 1980

Calculate the percentage increase in GDP per capita

Finally, we will calculate the percentage increase in Denmark's GDP per capita between 1980 and 2000 using the following formula: Percentage increase = \(\frac{Change \: in \: GDP \: per \: capita}{GDP \: per \: capita \: in \: 1980}\) × 100 Now let's apply these steps and calculate the values.

Key concepts

Macroeconomics

Macroeconomics is the branch of economics that studies the behavior and performance of an economy as a whole. It focuses on broad phenomena, such as GDP, inflation rates, unemployment, and economic growth. Understanding macroeconomics is crucial for assessing economic policy, making investment decisions, and analyzing the impacts of various economic events on the country's well-being.

Examining Denmark's GDP per capita from 1980 to 2000, as in the exercise, falls under macroeconomic analysis. By looking at the big picture rather than individual markets or sectors, we assess the economic health and standard of living of an entire nation's population. Macroeconomists use GDP per capita as a key indicator to gauge economic prosperity and inform policy decisions.

Economic Growth

Economic growth is measured by the increase in a country's output of goods and services, commonly referred to as its Gross Domestic Product (GDP). When we observe economic growth, we expect to see an improvement in the standard of living, which often translates to an increase in GDP per capita, a measure that accounts for population changes.

When analyzing Denmark's economic growth from 1980 to 2000 through the lens of GDP per capita, we aren't simply looking at increases in total GDP. Instead, we're focusing on how much the economy has grown relative to the population size. This distinction is vital as a country's GDP could grow due to population growth rather than increasing productivity or higher standards of living. Therefore, GDP per capita is a more accurate reflection of individual prosperity.

GDP Calculation

The calculation of GDP per capita is straightforward: it's the division of a country's total Gross Domestic Product (GDP) by its population. It provides a per-person economic output figure, which is essential for comparing living standards and economic productivity over time or between different countries.

Using the exercise's given figures for Denmark, we can see how this calculation is used to determine economic progress. Calculating the GDP per capita for 1980 and 2000 allows us to quantify the change in economic welfare for the average citizen. The formula for the percentage increase in GDP per capita then offers a clear picture of growth over the two decades, adjusting for population changes to provide an assessment of real economic improvement.