If real income per person in 2018 is $18,073 and real income per person in 2019 is $18,635, what is the growth rate of real income over this period?

Question

a. 18.0 percent
b. 2.5 percent
c. 5.62 percent
d. 18.6 percent
e. 3.1 percent

Answer 1

To calculate the growth rate of real income from 2018 to 2019, we can use the formula for growth rate:

\[ \text{Growth Rate} = \frac{\text{Value in 2019} - \text{Value in 2018}}{\text{Value in 2018}} \times 100 \]

Plugging in the values:

\[ \text{Growth Rate} = \frac{18,635 - 18,073}{18,073} \times 100 \]

Calculating the difference:

\[ 18,635 - 18,073 = 562 \]

Now, replace the difference in the formula:

\[ \text{Growth Rate} = \frac{562}{18,073} \times 100 \]

Calculating the fraction:

\[ \frac{562}{18,073} \approx 0.0311 \]

Now converting it to a percentage:

\[ 0.0311 \times 100 \approx 3.11% \]

Thus, the growth rate of real income from 2018 to 2019 is approximately 3.1 percent.

The correct answer is e. 3.1 percent.