5. The real GDP per person in Brazil was $828 in 1900 and $15,590 in 2014. What was theaverage annual growth in real GDP per person? Use logs. Show your work.

Answered: 5. The real GDP per person in Brazil…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. The real GDP per person in Brazil was $828 in 1900 and $15,590 in 2014. What was the
average annual growth in real GDP per person? Use logs. Show your work.

Expert Solution

Step 1

Using log, the annual growth rate of real gdp (RGDP) per capita is given by,

$\begin{array}{rcl} g & = & \frac{\ln (R G D P_{2014}) - \ln (R G D P_{1900})}{114} \\ = & \frac{1}{114} \ln (\frac{R G D P_{2014}}{R G D P_{1900}}) \\ = & 0.026 (a p p r o x) \end{array}$

Hence the growth rate was 2.6% approx.

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