Growth Rate of GDP

Growth Rate of GDP - GrowthRateofGDP

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Growth Rate of GDP  GDP is an excellent index with which to compare the economy at two points in time.  That comparison can then be used formulate the growth rate of total output within a  nation.  In order to calculate the GDP growth rate, subtract 1 from the value received by dividing  the GDP for the first year by the GDP for the second year.  GDP growth rate = [(GDP 1 )/(GDP 2 ] - 1  For example, using , in year 1 Country B produced 5 bananas worth $1 each and 5  backrubs worth $6 each. In year 2 Country B produced 10 bananas worth $1 each and  7 backrubs worth $6 each. In this case the GDP growth rate from year 1 to year 2 would  be:  [(10 X $1) + (7 X $6)] / [(5 X $1) + (5 X $6)] - 1 = 49%  There is an obvious problem with this method of computing growth in total output: both  increases in the price of goods produced and increases in the quantity of goods 
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This note was uploaded on 12/13/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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Growth Rate of GDP - GrowthRateofGDP

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