Respuesta :
Answer:
a) 469.40%
b) 18.15%
Explanation:
a)
Total nominal growth rate = [tex](\frac{\textup{Earned income in 2016}}{\textup{Earned income in 1976}}-1)\times100\%[/tex]
thus,
Total nominal growth rate = [tex](\frac{\textup{52,624}}{\textup{9,242}}-1)\times100\%[/tex]
= 469.40%
b) Total real growth rate = [tex](\frac{\textup{Real earned income in 2016}}{\textup{Real earned income in 1976}}-1)\times100\%[/tex]
now,
Real earned income in 1976 = [tex]\frac{\textup{Earned income in 1976}}{\textup{CPI in 1976}}[/tex]
= [tex]\frac{\textup{9,242}}{\textup{45.6}\%}[/tex]
= $20,267.54
and,
Real earned income in 2016 = [tex]\frac{\textup{Earned income in 2016}}{\textup{CPI in 2016}}[/tex]
= [tex]\frac{\textup{52,624}}{\textup{219.75}\%}[/tex]
= $23,947.21
Therefore,
Total real growth rate = [tex](\frac{\textup{23,947.21 }}{\textup{20,267.54 }}-1)\times100\%[/tex]
= 18.15%
Total nominal growth rate and Total real growth rate are 469.40% and 18.15% respectively.
What is nominal and real growth rate?
Nominal growth rate refers to how an economy is assessed in terms of production, which comprises current price calculation.
Also real growth rate take into consideration the actual improvement experienced by a country within a period.
a) Total nominal growth rate
= [(Earned income in 2016 / Earned income in 1976) - 1 ] * 100%
= [(52,624 / 9,242) - 1] * 100%
= 469.40%
b) Total real growth rate
= [(Real earned income in 2016 / Real earned income in 1976) - 1] * 100%
But,
Real earned income in 1976
= Earned income in 1976 / CPI in 1976
= $9,242 / 45.06%
=$20,267.54
Also,
Real earned income in 2016
= Earned income in 2016 / CPI in 2016
= $52,624 / 219.75%
= $23,947.21
Hence,
Total real growth rate
= [($23,947.21 / $20,267.54) - 1 ] * 100%
= 18.15%
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