Answer :
To calculate the growth rate of your contribution to nominal GDP, you need to consider the total value of your tutoring services provided in each semester.
a. Growth rate of nominal GDP:
1. Last semester's total earnings: 50 hours * $15/hour = $750
2. This semester's total earnings: 55 hours * $18/hour = $990
3. Nominal GDP growth rate formula: ((This semester's total earnings - Last semester's total earnings) / Last semester's total earnings) * 100%
4. Calculate the growth rate: (($990 - $750) / $750) * 100% = (240 / 750) * 100% = 32%
To calculate the growth rate of your contribution to real GDP, you need to adjust for inflation or changes in the price level.
b. Growth rate of real GDP:
1. Assume the inflation rate is 5%.
2. Real earnings last semester: $750 / (1 + 0.05) = $714.29
3. Real earnings this semester: $990 / (1 + 0.05) = $942.86
4. Real GDP growth rate formula: ((Real earnings this semester - Real earnings last semester) / Real earnings last semester) * 100%
5. Calculate the growth rate: (($942.86 - $714.29) / $714.29) * 100% = ($228.57 / $714.29) * 100% = 32%
The growth rate of your contribution to nominal GDP is 32%, and the growth rate of your contribution to real GDP, considering a 5% inflation rate, is also 32%. This implies that the increase in your earnings is mainly due to the increase in the number of hours tutored and the higher rate charged, without significant effects from inflation on real GDP growth.
