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21 February 2013 Econ 202

# S gdp billions 15075 2012 us gdp 15676 gdp growth 4

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2011 U.S. GDP (billions) - \$15,075 2012 U.S. GDP - \$15,676  = GDP growth – 4%  - Price growth (inflation) – 1.8%  = Real GDP growth – 2.2%  - Population growth – 1%  = Real per capita GDP growth = 1.2% = economic growth  o Example Start at \$50,000 Growth rate = 2% Year 1 Income: \$50,000 Income increase: \$1,000 Year 2 Income: \$51,000 Income increase: \$1,020 Year 3 Income: \$52,020 Income increase: \$1,040.40

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Takes 35 years to get to \$100,000 Doubled the standard of living  Rule of 70: With annual growth of x percent, the level of a variable doubles  every 70/x years o 1% annual growth rate, 70 years to double Value of \$1.00 after 70 years = \$2 o 2% annual growth rate, 35 years to double Value of \$1.00 after 70 years = \$4 58 years of Growth  Nicaragua o Growth Rate: 0.1% o Real GDP per capita (1950 and 2008): \$2,476 and \$2,565 El Salvador o Growth Rate: 1.2%
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S GDP billions 15075 2012 US GDP 15676 GDP growth 4 Price...

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