Real GDP increased from $\$ 400$ million to $\$ 500$ million in Hamsterville. Real GDP only increased from $\$ 400$ million to $\$ 440$ million in Atlantis.

Which of the following best describes why Atlantis may actually have experienced more economic growth than Hamsterville?

Choose 1 answer:
(A) The price level in Hamsterville may be increasing faster than in Atlantis
(B) Atlantis' population is growing more slowly than Hamsterville's population
(C) The price level in Atlantis might be increasing faster than in Hamsterville
(D) Hamsterville's population is growing more slowly than Atlantis' population
(E) None of the above, both countries are growing at the same rate

Question

Real GDP increased from $\$ 400$ million to $\$ 500$ million in Hamsterville. Real GDP only increased from $\$ 400$ million to $\$ 440$ million in Atlantis.

Which of the following best describes why Atlantis may actually have experienced more economic growth than Hamsterville?

Choose 1 answer:
(A) The price level in Hamsterville may be increasing faster than in Atlantis
(B) Atlantis' population is growing more slowly than Hamsterville's population
(C) The price level in Atlantis might be increasing faster than in Hamsterville
(D) Hamsterville's population is growing more slowly than Atlantis' population
(E) None of the above, both countries are growing at the same rate

Accepted Answer

∻Solution by Steps∻ ‖ step 1 ⋮ To compare economic growth between two countries, we need to consider changes in Real GDP in relation to population growth and price levels. ‖ ‖ step 2 ⋮ If the price level is increasing faster in Hamsterville than in Atlantis, it could mean that Hamsterville's Real GDP growth is partly due to inflation rather than an actual increase in economic output. ‖ ‖ step 3 ⋮ If Atlantis' population is growing more slowly than Hamsterville's, then the Real GDP per capita in Atlantis could be increasing faster, indicating more economic growth per person. ‖ ‖ step 4 ⋮ Since Real GDP accounts for inflation, option C is incorrect because it suggests that the price level in Atlantis is increasing faster, which would not affect Real GDP. ‖ ‖ step 5 ⋮ Option D is incorrect because if Hamsterville's population is growing more slowly, it would suggest that Hamsterville might have more economic growth per capita, not Atlantis. ‖ ‖ step 6 ⋮ Option E is incorrect because it suggests that both countries are growing at the same rate, which is not supported by the information given about Real GDP growth. ‖ ‖ step 7 ⋮ Therefore, the best explanation for why Atlantis may have experienced more economic growth than Hamsterville, despite the lower increase in Real GDP, is that Atlantis' population is growing more slowly, leading to higher Real GDP per capita growth. ‖ ∻Answer∻ ***B*** ∻Key Concept∻ ⚹Real GDP per capita growth⚹ ∻Explanation∻ ⚹Real GDP per capita growth is a better indicator of economic growth than Real GDP alone because it accounts for population changes.⚹◊What statistical methods could be used to compare the economic growth of Hamsterville and Atlantis based on the given information?⍭ Generate me a similar question◊

Sia