macro question

[econ14]

If real GDP, population and prices are increasing respectively at 8%, 2.5% and 5%
per annum, then growth rate of real per capita GDP is: plz explain how to do this.

[vandita24x7]

I guess it should be 8/2.5 = 3.2

vandita

On 25 Mar 2014 15:57, "sandeep pandey [via Discussion forum]" <[hidden email]> wrote:

If real GDP, population and prices are increasing respectively at 8%, 2.5% and 5%
per annum, then growth rate of real per capita GDP is: plz explain how to do this.

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[kangkan]

Per capiat real GDP = Real GDP/Population

therefore using growth formula % change in real gdp= %change in real GDP- % percentage change in Population

Therefore the answer is 8 -3=5 (i tink)

[kangkan]

sorry..8-5=3

[Arushi :))]

@ kangkan,
i agree with you,
but you took 5 for population, it is 2.5.
therefore, growth rate of real per capita GDP should be 8%-2.5%= 5.5%

[Anjali]

Why not 8%/2.5% ?
Gdp per capita would be total output upon total population. So can we not take it as % change in output/ % change in population?
Please explain .

[Arushi :))]

we have to find growth rate of real per capita GDP,
And real per capita GDP= Real GDP/ population
And hen things are in fraction then growth rate is found out by subtracting growth rate of denominator from that of numerator.
so i guess they should be subtracted.

[Anjali]

I will check and let you know

[Anjali]

One more thing , for which all papers should I prepare econometrics ?

[The Villain]

i guess arushi is right...i tried with the same way

[Anjali]

Yup arushi your approach is correct. I have googled and checked for it. Great !

[RajEco]

You can work that out by taking the logs and then by taking the growth rates.-

Let real GDP per capita be yn be real GDP per capita

yn= Y/N   where Y is the real Gdp and N is the population.

taking logs on both sides

log yn = LogY - Log N
Taking the derivative with respect to time-

dlog yn/dt  = dlogY/dt - dlogN/dt
=> growth rate of real gdp per capita = 8 - 2.5 = 5.5 %

(note d logx/dt implies the growth rate of x)

[kangkan]

yes..i jumbled up the values

[Anjali]

@ Raj , Perfect !