In Year 1, Country Y recorded a Nominal GDP of \text{₦}3.2\text{ trillion}. By Year 2, its… — JAMB UTME

In Year 1, Country Y recorded a Nominal GDP of $\text{₦}3.2\text{ trillion}$ . By Year 2, its Nominal GDP increased by $25\%$ , while its GDP deflator stood at $125$ (with base year price index = $100$ ). If the Real Per Capita Income of Country Y in Year 2 was $\text{₦}64,000$ , what was the total population of Country Y in Year 2 (in millions)?

Answer: 50 million

Answer

The population of Country Y in Year 2 was 50 million.

To find the population, Real GDP must first be calculated by adjusting Year 2 Nominal GDP (

\text{₦}4.0\text{ trillion}

) for price inflation using the GDP deflator (

125

), giving a Real GDP of

\text{₦}3.2\text{ trillion}

. Dividing this Real GDP by the Real Per Capita Income of

\text{₦}64,000

yields a population of

50\text{ million}

Step-by-Step Solution

Determine the Nominal GDP for Year 2 after the 25% growth.

Nominal GDP in Year 2 is

\text{₦}4.0\text{ trillion}

25\%

increase on

\text{₦}3.2\text{ trillion}

equals

\text{₦}3.2\text{ trillion} \times 1.25 = \text{₦}4.0\text{ trillion}

Deflate Year 2 Nominal GDP to find Year 2 Real GDP.

Real GDP in Year 2 is

\text{₦}3.2\text{ trillion}

Real GDP adjusts for inflation using the formula

\text{Real GDP} = \frac{\text{Nominal GDP}}{\text{GDP Deflator}} \times 100

Divide Real GDP by Real Per Capita Income to solve for total population.

Population is

50\text{ million}

Since

\text{Real Per Capita Income} = \frac{\text{Real GDP}}{\text{Population}}

, rearranging gives

\text{Population} = \frac{\text{Real GDP}}{\text{Real Per Capita Income}}

Key Concept

Relationship between Nominal GDP growth, GDP Deflator, Real GDP, and Real Per Capita Income

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