The GDP in Argentina is $637 billion. The rate of inflation is 2.5%. If the population of Argentina is 43,937,000, find the per capita GDP in this country.
Real GDP = GDP - (GDP * Inflation Rate)
Per Capita GDP = \frac{\text { Real GDP }}{\text { Population }}
Per Capita GDP = $[?] Round to the nearest cent.
Answer (2)
To calculate the per capita GDP of Argentina, we first find the Real GDP by adjusting the GDP for inflation, which amounts to approximately $621.075 billion. Then, by dividing this number by the population of 43,937,000, we find the per capita GDP to be approximately $14,135.58. This figure represents the average economic output per person in the country.
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Calculate the Real GDP: Real GDP = 637 − ( 637 × 0.025 ) = 621.075 billion dollars.
Convert Real GDP to dollars: 621.075 × 1 0 9 dollars.
Calculate Per Capita GDP: 43 , 937 , 000 621.075 × 1 0 9 ≈ 14135.58049 .
Round to the nearest cent: $14135.58 .
Explanation
Understanding the Problem We are given the GDP of Argentina, the inflation rate, and the population. We need to find the per capita GDP. The formulas for Real GDP and Per Capita GDP are also provided.
Calculating Real GDP First, we need to calculate the Real GDP. The formula is: Real GDP = GDP − ( GDP ⋅ Inflation Rate ) We are given that the GDP is 637 billion dollars and the inflation rate is 2.5% = 0.025 . Plugging these values into the formula, we get: Real GDP = 637 − ( 637 ⋅ 0.025 ) = 637 − 15.925 = 621.075 billion dollars
Calculating Per Capita GDP Next, we need to calculate the Per Capita GDP. The formula is: Per Capita GDP = Population Real GDP We have the Real GDP in billions of dollars, so we need to convert it to dollars by multiplying by 1 0 9 . Thus, the Real GDP in dollars is 621.075 × 1 0 9 dollars. The population is 43 , 937 , 000 . Plugging these values into the formula, we get: Per Capita GDP = 43 , 937 , 000 621.075 × 1 0 9 = 43 , 937 , 000 621 , 075 , 000 , 000 ≈ 14135.58049
Rounding the Result Finally, we need to round the Per Capita GDP to the nearest cent, which is two decimal places. So, we have: Per Capita GDP ≈ $14135.58
Examples
Understanding per capita GDP is crucial in economics and finance. For instance, if you're analyzing investment opportunities in different countries, per capita GDP helps you assess the average economic output per person. A higher per capita GDP often indicates a more developed and prosperous economy, which can influence investment decisions. It's also useful for comparing living standards across nations and understanding the potential market size for various goods and services. By calculating and comparing per capita GDP, investors and policymakers can make more informed decisions about resource allocation and economic development strategies.
