Change in Gross Domestic Product Quick Check

Question

2 of 52 of 5 Items
Question
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)
Responses

150%
150 percent

25%
25 percent

125%
125 percent

1.5%

Answer 1

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

$$\text{Growth Rate}=\frac{\text{GDP in Year 2}-\text{GDP in Year 1}}{\text{GDP in Year 1}}\times 100$$

Plugging in the values:

$$\text{Growth Rate}=\frac{7.5\text{ billion}-6\text{ billion}}{6\text{ billion}}\times 100$$

$$=\frac{1.5\text{ billion}}{6\text{ billion}}\times 100$$

$$=0.25\times 100$$

$$=25$$

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