Question

A stock market boom causes consumer wealth to increase which results in consumer spending to increase. This increase results in real GDP increasing from $28,000 to $31,000. What is the percent change in real GDP

Answer 1

Answer:

The correct answer is: 10,71%.

Explanation:

The Gross Domestic Product (GDP) is a measure of the growth of an economy given a period. It considers government expenditures, private investments, consumers' consumption, and net exports (exports minus imports). Real GDP, on top of what the GDP includes, accounts for fluctuations in prices which contributes reflecting a better picture of the growth of an economy.

In the example, if the real GDP increases from $28,000 to $31,000, being "x" the percentage change and by the rule of three:

$28,000 → 100%

$31,000  → x

$x = \frac{(31,000)(100)}{28,000}$

x = 110,71%

Percentage change = 110,71% - 100% = 10,71%