Question

Quarter Real GDP (billions of dollars) Long-Run Trend of Real GDP (billions of dollars) 1 4,000 4,000 2 4,160 4,120 3 4,326 4,244 4 4,413 4,371 5 4,501 4,502 6 4,591 4,637 7 4,499 4,776 8 4,409 4,919 9 4,673 5,067 10 4,954 5,219 11 5,252 5,376 12 5,376 5,537 Between quarter 10 and quarter 11, real gross domestic product (GDP) grew by what percentage?

Answer 1

Answer:

6%

Explanation:

As per given data

Quarter     Real GDP ($billions)     Long-Run Trend of Real GDP ($billions)

   1                      4,000                                   4,000

   2                     4,160                                    4,120

   3                     4,326                                    4,244

   4                     4,413                                    4,371

   5                     4,501                                    4,502

   6                     4,591                                    4,637

   7                     4,499                                    4,776

   8                     4,409                                    4,919

   9                     4,673                                    5,067

   10                    4,954                                    5,219

   11                     5,252                                    5,376

   12                    5,376                                    5,537

Growth of GDP = (DGP of Current/recent period - GDP of Prior period) / DGP of Prior period

In this question prior period is quarter 10 and current /recent period is quarter 11.

So, formula will be

Growth of GDP = (DGP of quarter 11 - GDP of quarter 10) / GDP of quarter 10

As we need to calculate the real GDP growth the formula will be as follow

Growth of real GDP = (Real DGP of quarter 11 - Real GDP of quarter 10) / Real GDP of quarter 10

Growth of real GDP = ($5,252 billion - $4,954 billion) / $4,954 billion

Growth of real GDP = $298 billion / $4,954 billion

Growth of real GDP = 6.02% = 6%