Question

Suppose that a nation has a GDP of 1.0 trillion dollars in 2000. If a country grows at an average rate of 3.0 % per year over a fifteen year period, then its compounded GDP at the end of the 15 year period should be:

Answer 1

Answer:

$1.558 trillion

Explanation:

Given an initial GDP of $1 trillion and an average growth rate of 3% per year, at the end of 15 years, the GDP would have risen to:

$GDP_{2000} * (1+r)^{15}$

$= 1 trillion * (1+0.03)^{15}$

$= 1 trillion * (1.03)^{15}$

$= 1 trillion * 1.558$

= 1.558 trillion.