How to find percentage change in real GDP?
Understand the Problem
The question is asking for the method or formula to calculate the percentage change in real Gross Domestic Product (GDP). This involves understanding the numerator and denominator which are required to determine the change from one period to another.
Answer
(Real GDP in Year 2 - Real GDP in Year 1) / Real GDP in Year 1 * 100
The final answer is (Real GDP in Year 2 - Real GDP in Year 1) / Real GDP in Year 1 * 100
Answer for screen readers
The final answer is (Real GDP in Year 2 - Real GDP in Year 1) / Real GDP in Year 1 * 100
More Information
This formula helps to understand the economic growth rate by eliminating the effects of inflation and deflation, focusing solely on the 'real' increase in economic production.
Tips
A common mistake is to forget to multiply by 100 to get the percentage change.
Sources
- How to Calculate Real GDP Growth Rates - quickonomics.com
- Real Economic Growth Rate: Definition, Calculation, and Uses - investopedia.com
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