Practice Quiz on Growth Arithmetic

  1. A country produces one type of output, shmoos. Below is a table that lists the country's population, the dollar value of shmoos produced each year and the price of shmoos in each year. Fill in the rest of the table.

    YearPopulationNominal GDP
    (Dollar value of shmoos)    		Price index of shmoosReal GDP
    (real value of shmoos)    		Real GDP Per Capita
    19881000$143,0001.00 ? ?
    19911049$161,0001.09 ? ?
    19931078$171,0001.13 ? ?
    20001192$198,0001.25 ? ?

  2. What was the average annual growth rate in nominal GDP between 1988 and 1991?
  3. What was the average annual growth rate in real GDP between 1988 and 1991?
  4. What was the average annual rate of inflation between 1988 and 1991?
  5. What was the average annual growth rate of real GDP between 1991 and 2000?
  6. What was the average annual rate of inflation between 1988 and 1993?
  7. What was the average annual growth rate of real GDP per capita from 1988 to 1991? From 1991 to 1993? From 1993 to 2000?

  8. Which of the following is the better approximation of the growth rate of GDP per capita?
    (a) (the growth rate of nominal GDP divided by the rate of inflation), divided by the growth rate of population
    (b) (the growth rate of nominal GDP minus the rate of inflation) minus the growth rate of population

    Defend your answer.