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Author Question: If a nation's population grows at 2 percent and its real GDP grows at 4 percent, what is the growth ... (Read 171 times)

leilurhhh

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on: Jun 29, 2018
If a nation's population grows at 2 percent and its real GDP grows at 4 percent, what is the growth rate of real GDP per person?
 
  What will be an ideal response?

Question 2

What is the effect on aggregate supply and potential GDP of an increase in the money wage rate?
 
  What will be an ideal response?


potomatos

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The growth rate of real GDP per person equals the growth rate of real GDP minus the population growth rate. Hence, in the question at hand, the real GDP per person growth rate equals 4 percent minus 2 percent, or 2 percent.

Answer to Question 2

An increase in the money wage rate decreases aggregate supply and shifts the aggregate supply curve leftward. It has no effect on potential GDP.


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