Question

How much more or less) output will the average American have next year if the $18 trillion GDP grows (or contracts) by: Assume a population of 320 million. If the economy contracts, be sure to put a (-) in front of your answer. a. 1.5 percent? b.-0.5 percent? c. -2 percent?

Answer 1

Current output that the average American has= Current Per Capita GDP

Current per capita GDP= GDP/Population

Current per capita GDP= $18 trillion/ 320 million= $56250.

a) If the Economy grows by 1.5 percent, then,

GDP= (1+0.015)× $ 18 trillion= $18.27 trillion.

Per Capita GDP= $57093.75.

Increase in Per Capita GDP= (57093.75–56250)= $843.75.

Average American will have $ 843.75 more output next year.

b) if the economy grows by -0.5%(contracts)

GDP= (1-0.005)×$18 trillion= $17.91 trillion

Per capita GDP= 17.91 trillion/320 million= $55968.75

Increase in per capita GDP= (55968.75–56250)= –$281.25

Average American will have $281.25 less Output next year .

c) if Economy grows by –2%(contracts),

GDP= (1–0.02)×$18 trillion=$ 17.64 trillion.

Per capita GDP= 17.64 trillion/ 320 million= $ 55125

Increase in per capita GDP= (55125–56250) = –$ 1125.

Average American will have $ 1125 less output nex year.