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February 10th, 2019, 08:47 AM  #1 
Member Joined: Mar 2017 From: Israel Posts: 85 Thanks: 2  Macroeconomics
Hello Can you help me please about the next exercise: The nominal GDP of the economy has increased by 16% in the last decade, the population has increased by 11%, and the price index has increased by 3%. What is the value of real GDP per capita? I just know that real GDP (not per capita) is 1.16/1.03, but it's my first (or second, I'm not sure) question about real GDP per capita and increasing of population, so I don't really know how to solve this. Thanks! 
February 10th, 2019, 09:31 AM  #2 
Senior Member Joined: May 2016 From: USA Posts: 1,310 Thanks: 551 
Hi Ilan The question is not well posed. (I know you probably translated it so that is not surprising, but it means I am not 100% sure that I can answer your question exactly.) Suppose the nominal gdp, real gdp, population, and real gdp per capita are each indexed at 100 as of a decade ago. Thus, if I understand the question, the index for nominal gdp now stands at 116 and the price index currently stands at 103. That implies that real gdp has an index of $\dfrac{116}{103} * 100 \approx 112.62$ The population index is currently 111. So the index of real gdp per capita is $\dfrac{100 * \dfrac{116}{103}}{111} * 100 \approx 101.46.$ Now that is plausible and can be checked mentally as follows. 116 relative to 100 is a 16% increase. 103 relative to 100 is a 3% increase. So real gdp increased about 13%. Population increased by 11%. So population per capita increased about 2%. 
February 10th, 2019, 10:19 AM  #3  
Member Joined: Mar 2017 From: Israel Posts: 85 Thanks: 2  Quote:
Last edited by skipjack; February 10th, 2019 at 10:23 AM.  

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