AboutWarren D. Miller, CFA, ASA, CMA, CPA Expertise My in-depth knowledge of economics is confined to three sub-disciplines: Austrian economics, industrial organization, and evolutionary economics. Other questions dealing with macroeconomics, the traditional neoclassical paradigm, labor economics, environmental economics, agricultural economics, health economics, and so on should go to those who have the appropriate expertise.
N.B.: I DO NOT ANSWER QUESTIONS MARKED 'PRIVATE' because I believe that knowledge should be shared, not hoarded. I also believe that such questions are likely to come those trying to cheat. Similarly, as one who was a full-time academic for half a decade, I can recognize test and homework questions several time zones away. Therefore, please do not demean yourself by submitting such questions to me. Those who do so are cheating, pure and simple, and I WILL call you out publicly if I believe you are doing so. I have a zero-tolerance policy where cheating and dishonesty are concerned.
In addition, please don't imitate the businessman who posted a request for help in August 2008. He expressly denied that he was seeking "investment advice" and said that his query was for, and I quote, "educational and informational purposes." Later, he allowed as how his questions related to the possible purchase of a $500K piece of equipment. I said I thought he had misrepresented himself. Bottom line: high-end business consulting is how I make my living. I am the sole support for my family. Please respect that fact and don't try to get for free what our clients pay for. If your company is big enough to have a sophisticated problem, it's big enough to pay for the kind of expert advice we provide. Beckmill Research, LLC, is a 95-octane firm. We're small, but we've been at this for nearly 18 years. We know what we're doing.
Finally, please DO NOT ask for investment advice. I am not licensed to provide such advice. If you want such advice, check with your financial planner or other financial adviser.
Experience I work with Austrian economics (which is different in major respects from the traditional neoclassical model), industrial organization (which is about industry structure, conduct, and performance), and evolutionary economics (almost, but not quite, the economic analog of its biological counterpart) everyday in my work. I appraise closely-held businesses, provide exit-planning services, and offer high-level strategic analysis, advice, and clients to CEOs and owners of mid-sized businesses. Understanding, applying, and writing about these disciplines is an essential part of how I have made my living since 1993.
Organizations CFA Institute, Strategic Management Society, American Society of Appraisers, Institute of Management Accountants, Academy of Management, Culver Legion
Publications CFA Magazine, Strategic Finance, Valuation Strategies, Value Examiner, Journal of Advanced Property Economics, Harvard Business Review, American Fly Fisher, CFA Digest, CPA Expert, and Business Valuation Review, among others
Education/Credentials MBA - Oklahoma State (1991)
BBA - U. of Oklahoma (1975)
Chartered Financial Analyst designation (2006)
Accredited Senior Appraiser (2006)
Certified Management Accountant (1992)
Certified Public Accountant (1992)
I am confused with GDP per capita calculation. As i know it should be like following.
Conditions: GDP (projected 2009) is $ 43.65 billion. Inflation(2008) is 20.2 percent. Population of the country is 8.6 million (0.086 billion).
My calculation: 43.65/0/086=507.56 Taking into account an inflation I deduct it from the amount i have gained i.e. 507.56-(507.56*0.202)=405.03
Question:
I have taken the condition mentioned above from IMF statistics and after their economic figures they show GDP per capita (2009 projected)which is $ 7,143 (not 405.03 that i have calculated). What wrong have i done?
Thank you in advance
Regards,
Aytan
Answer Hi, Aytan--
Thank you for your question, and thank you for using AllExperts.com. I'll be glad to help you.
As I see it from here, I think you made two small errors, but they were enough to take your computation for off-course. When you're dealing with big numbers--and GDP is, like most macroeconomic measures, usually a big number--then even one small error can take you far from where you need to be.
Your first error was assuming that 8.6 million = .086 billion. That's not accurate - you missed it by a magnitude (magnitude = 1 power of 10). .086 billion = 86 million, not 8.6 million. So you divided by a number that was 10 times the size of what you should have divided by, .0086. As a result, you got a number that was 1/10 of what it should have been.
Your second miscalculation was in 'deflating' your computation by 20.2%. GDP is expressed in "nominal" terms, not "real" ones. In other words, it includes inflation. You excluded it. So that reduced your already-too-low number even more.
Now, when I do the computation for 2009, here's what I get:
$43.64 B / 0.0086 B people = $5,076 per capita. There is no adjustment for inflation.
Unless I know which country you're talking about--and I can see that it is NOT Greece!--there's not much more I can do. Please send me the country, and I'll try to take our conversation a little further for you.
