Question

In 2010, the imaginary nation of Bovina had a population of 5,000 and real GDP of 600,000. In 2011 it had a population of 5,200 and real GDP of 636,480. During 2011 real GDP per person in Bovina grew by a. 2 percent, which is high compared to average U.S. growth over the last one-hundred years. b. 2 percent, which is about the same as average U.S. growth over the last one-hundred years. c. 4 percent, which is high compared to average U.S. growth over the last one-hundred years. d. 4 percent, which is about the same as average U.S. growth over the last one-hundred years. Hide Feedback Incorrect

Answer 1

Answer:

The correct answer is B. During 2011, real GDP per person in Bovina grew by 2 percent, which is about the same as average U.S. growth over the last one-hundred years.

Explanation:

To determine the growth rate of Bovina, the country's GDP per capita must be calculated, which gives a genuine result regarding the country's production based on the size of its population. The GDP per capita is calculated by dividing production by the number of inhabitants of the country.

In 2010, Bovina had a GDP per capita of $ 120, since it had a GDP of $ 600,000 and a population of 5,000 people (600,000 / 5,000 = 120). In turn, in 2011, the country had a GDP per capita of $ 122.4, which arises from having a population of 5,200 and a GDP of $ 636,480 (636,480 / 5,200 = 122.4).

As we can see, there was a growth in the GDP per capita, so there was a real growth in the GDP of the country. To determine the growth percentage, we must determine how much 2.4 (122.4 - 120) represents with respect to the initial GDP per capita of 120. To do this, a cross multiplication must be used:

120 = 100

2.4 = X

(2.4 x 100) / 120 = X

240/120 = X

2 = X

As we can see, the economic growth between 2010 and 2011 was 2%.