Use the data on real GDP in the following table to answer...

Use the data on real GDP in the following table to answer the following questions. The values are measured in each country's domestic currency. The base year for Brazil is 1995 ; the base year for Mexico is $2008 ;$ and the base year for Thailand is 1988 . $$\begin{array}{|c|c|c|c|}\hline \text { Country } & {2011} & {2012} & {2013} & {2014} \\ \hline \text { Brazil } & {1,192} & {1,213} & {1,247} & {1,248} \\ \hline \text { Mexico } & {12,774} & {13,286} & {13,471} & {13,757} \\ \hline \text { Thailand } & {4,600} & {4,898} & {5,040} & {5,076} \\ \hline\end{array}$$ a. Which country experienced the highest rate of economic growth during 2012 (that is, for which country did real GDP increase the most from 2011 to 2012$) ?$ b. Which country experienced the highest average annual growth rate between 2012 and 2014 ? c. Does it matter for your answers to parts (a) and (b) that each country's real GDP is measured in a different currency and uses a different base year? Briefly explain.

Use the data on real GDP in the following table to answer the following questions. The values are measured in each country's domestic currency. The base year for Brazil is 1995 ; the base year for Mexico is $2008 ;$ and the base year for Thailand is 1988 .
$$\begin{array}{|c|c|c|c|}\hline \text { Country } & {2011} & {2012} & {2013} & {2014} \\ \hline \text { Brazil } & {1,192} & {1,213} & {1,247} & {1,248} \\ \hline \text { Mexico } & {12,774} & {13,286} & {13,471} & {13,757} \\ \hline \text { Thailand } & {4,600} & {4,898} & {5,040} & {5,076} \\ \hline\end{array}$$
a. Which country experienced the highest rate of economic growth during 2012 (that is, for which country did real GDP increase the most from 2011 to 2012$) ?$
b. Which country experienced the highest average annual growth rate between 2012 and 2014 ?
c. Does it matter for your answers to parts (a) and (b) that each country's real GDP is measured in a different currency and uses a different base year? Briefly explain.

Key Concepts

Economic Growth Rate

The economic growth rate is the rate at which a country's real GDP increases over a period of time. It is typically calculated as the percentage change in real GDP from one period to the next, indicating the pace at which an economy is expanding or contracting.

Real GDP

Real GDP is the measure of a country’s economic output adjusted for changes in price or inflation. It reflects the actual volume of production in an economy by using constant base-year prices, which allows for a comparison of economic performance over time without the distortion of price changes.

Average Annual Growth Rate

The average annual growth rate is the mean rate of growth of an economy over a multi-year period. It smooths out year-to-year fluctuations, providing a more stable measure of economic performance over time by calculating the compounded annual growth rate over the specified period.

Base Year

The base year is the reference year against which subsequent economic data are measured to remove the effects of inflation. In the context of real GDP, base year selection ensures that the price level remains constant when comparing different periods, making it possible to observe true changes in the quantity of goods and services produced.

Currency Measurement and Comparison

Even though real GDP values are measured in domestic currencies and use different base years for each country, the percentage change calculations for growth rates are independent of the currency units or base-year selection. This means that growth rate comparisons remain valid because each country's growth is measured relative to its own historical performance.

Transcript

00:01 Okay, so for this question, part a, ask which country experience the highest rate of economic growth during 2012? so that is to calculate the growth rate from 2011 to 2012.

00:17 So firstly, let's look at brazil.

00:22 Okay, so for brazil, we use the gdp of 2012 minus gdp of 2011, divided by the gdp of 2011, then we'll get the gross rate for brazil in 2012.

00:38 So that is 1 -213 minus 1192, and divided by 1192.

00:54 So that is, if you calculate, it should be 0176.

01:02 So that is a growth rate of the economy in brazil in 2012.

01:08 And for mexico, so still the same thing.

01:12 We use gdp of 2012, that is 30, 286 minus gdp of 2011, this 12, 74.

01:29 And divided by the gdp of 2011.

01:32 So that is 12774.

01:38 So if you calculate it, it is 0 .04.

01:42 Okay, so this one means it is like 1 .76 % increase, and this is like 4 % increase.

01:51 And what about thailand? so for thailand, still the same thing.

01:56 The gdp of 2012 is 48, 4898.

02:01 And the gdp of 2011 is 4600.

02:08 When you divide it by 4600, and if you calculate, it should be 0 .0647.

02:17 So you could see that which country has the highest rate of economic growth.

02:23 It should be thailand.

02:25 So it should be thailand.

02:27 This one is the highest because it's kind of like 6%.

02:32 Growth rates compared with other countries.

02:35 So this is part a and for part b.

02:44 So part b asks which country experience the highest average annual growth rate between 2012 and 2014.

02:54 So the average annual growth rate we need to calculate one year, year by year.

03:00 So let's first say look at brazil.

03:02 So the gdp of brazil in 2012 is 1213 and the gdp in 2013 is 1247.

03:13 So the economic growth rate, how to say it, the growth rate, the growth rate in 2030 is exactly, we use firstly the gdp of 2030, that is one to minus the gdp of 2012, that is 1213, and divided by the gdp of 2012, that is 1 to 1stray.

03:55 So if you calculate, it should be 0 .28.

04:01 So that's a growth rate in 2013.

04:05 And for the growth rate in 2014, 2014.

04:11 So we need to use the gdp of 2014 that is 1248 minus gdp of 2030 that is 1247.

04:21 So divided by the gdp of 2014 that is 1247...

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