Question

Annual real per capita gross domestic product (GDP) in the United States was roughly $44,000 in 2010. If it grew by 3 percent the following year, by 2011 the annual real per capita GDP would be?

Answer 1

Answer: $45,320

The annual Real per capital GDP =

$45,320

Explanation:

Real per capital GDP is used to compare the standard of living of two or more countries overtime.

It is also the ratio of total economic output by the population of people.

Calculations for the above question are explained below;

In 2010, the annual real per capital GDP in the United States = $44,000

The following year (2011), it increases by 3%

I. E., 3% of $44,000

%increase price =(3÷100)×$44,000

=$1, 320

In 2011, the annual real per capital GDP in the United States =%increase price + GDP in 2010

= $1,320 + $44,000

=$45,320

Answer 2

Answer:

$44,000 x (1 + 3%) = $44,000 x 1.03 = $45,320

Explanation:

Real GDP per capita is GDP per capita adjusted to inflation. It is simply a more accurate measure of total economic activity per person in a country because high inflation can distort nominal GDP per capita. Real GDP and GDP per capita usually helps to compare how a country's economy is doing over time.

When you want to compare GDP per capita for different countries you either use nominal GDP per capita or GDP per capita adjusted to purchasing power parity (PPP). The PPP uses the US dollar as the base currency for the world and it measures foreign economies according to the purchasing power of their currencies relative to the US dollar. E.g. a house in Switzerland is worth $500,000, while a similar house in Paraguay is worth 430,000, so the PPP adjusts the currency exchanges to show real purchasing power.