This equation is an approximation of the exact rate of growth of GDP per capita, and so it results in some errors when calculating this rate. However, the simplified equation is both easy to use and results in small error terms when inflation, nominal GDP growth, and population growth are low, and so it is a useful approximation. 

 

The table below lists a fictional country’s nominal GDP, real GDP, GDP deflator, and population over two years.

Year	Nominal GDP	GDP deflator	Real GDP (2012 dollars)	Population
2012	$1,100,000	100	$1,100,000	1,000
2013	$1,200,000	104	$1,153,846	1,005

a. Verify that the real GDP values in the above table are accurate.

Instructions: Round your answers to one decimal place.

b. This country’s real GDP per capita for 2012 is $ .

This country’s real GDP per capita for 2013 is $ .

c. The growth rate in this country’s real GDP per capita between 2012 and 2013 is %.

d. The growth rate in nominal GDP between 2012 and 2013 is %.

The growth rate in the GDP deflator between 2012 and 2013 is %.

The growth rate in the population between 2012 and 2013 is %.

Reference equation: Real GDP per capita growth rate Nominal GDP per capita growth rate Inflation rate - Population growth rate