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Which of the following has the highest real GDP growth? Nominal GDP growth rate of 8% inflation rate of 4% Nominal GDP growth rate of 6% inflation rate of 1% Nominal GDP growthirate of 11% inflation rate of 10%

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Which of the following has the highest real GDP growth?
Nominal GDP growth rate of 8%  inflation rate of 4% 
Nominal GDP growth rate of 6%  inflation rate of 1% 
Nominal GDP growthirate of 11%  inflation rate of 10%

Which of the following has the highest real GDP growth? Nominal GDP growth rate of 8% inflation rate of 4% Nominal GDP growth rate of 6% inflation rate of 1% Nominal GDP growthirate of 11% inflation rate of 10%

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JasmineAdvanced · Tutor for 1 years

Answer

Nominal GDP growth rate of 17% and inflation rate of 10%.

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We are given the nominal GDP growth rates and inflation rates for three scenarios. The prevailing question is which of these scenarios yields the highest real GDP growth.<br /><br />Recall that the formula to calculate real GDP growth is:<br /><br />\[<br />\text{Real GDP Growth} = \text{Nominal GDP Growth} - \text{Inflation Rate}<br />\]<br /><br />Applying this formula to each scenario:<br /><br />1. \[ \text{Real GDP Growth}_{1} = 8\% - 4\% = 4\% \]<br /><br />2. \[ \text{Real GDP Growth}_{2} = 6\% - 1\% = 5\% \]<br /><br />3. \[ \text{Real GDP Growth}_{3} = 17\% - 10\% = 7\% \]<br /><br /><br />After analyzing all the calculated real GDP growth figures, it is apparent that the scenario with the Nominal growth rate of 17% and inflation rate of 10% results in the highest real GDP growth.
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