Question

GDP per capita in thousand USD in a certain country is:

Years: 2016 ; 2017 ; 2018 ; 2019
GDP per capita: 6.9 ; 7.6 ; 8.5 ; 7.9
Calculate:
A) chain indexes
B) average growth rate for 2017-2019;
You should write formulas and all calculations.

Answer 1

A) To calculate chain indexes, we need to take the ratio of each year's GDP per capita to the previous year's GDP per capita and then multiply them all together.

Chain index for 2017 = (GDP per capita in 2017 / GDP per capita in 2016) * 100 = (7.6 / 6.9) * 100 = 110.14
Chain index for 2018 = (GDP per capita in 2018 / GDP per capita in 2017) * 100 = (8.5 / 7.6) * 100 = 111.84
Chain index for 2019 = (GDP per capita in 2019 / GDP per capita in 2018) * 100 = (7.9 / 8.5) * 100 = 92.94

B) To calculate the average growth rate for 2017-2019, we use the formula:

[(Ending Value / Beginning Value)^(1/Number of Years)] - 1

Average growth rate for 2017-2019 = [(7.9 / 7.6)^(1/2)] - 1 = 0.0301 or 3.01%

Note: The formula takes the geometric mean of the growth rates over the number of years, which is why we use 2 as the number of years in the formula.