The GDP for a hypothetical economy is determined to be 6 billion dollars in year 1 and 7.5 billion dollars in year 2. What is the growth rate of GDP from year 1 to year 2?(1 point)

Question

Responses

125%
125 percent

1.5%
1.5%

150%
150 percent

25%

Answer 1

To calculate the growth rate of GDP from year 1 to year 2, you can use the formula for percentage growth:

\[ \text{Growth Rate} = \left( \frac{\text{GDP in Year 2} - \text{GDP in Year 1}}{\text{GDP in Year 1}} \right) \times 100 \]

Substituting the values:

\[ \text{Growth Rate} = \left( \frac{7.5 \text{ billion} - 6 \text{ billion}}{6 \text{ billion}} \right) \times 100 \]

\[ \text{Growth Rate} = \left( \frac{1.5 \text{ billion}}{6 \text{ billion}} \right) \times 100 \]

\[ \text{Growth Rate} = 0.25 \times 100 = 25% \]

So the growth rate of GDP from year 1 to year 2 is 25%.