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Unformatted text preview: The formula used in the Parkin book is a good approximation. To see this consider the following example: Consider the increase in real GDP between 2006 and 2007. Suppose that the increase is 10% at 2006 base year prices and 20% at 2007 base year prices. Parkins formula says take the average, which is 15%. Plugging the gross growth rates (1+growth) into the actual formula, we get: square root of (1.10 x 1.20) = 1.149, which implies a growth rate of (1.149 1)x100 = 14.9%, which is very close to Parkins approxmation....
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This note was uploaded on 04/07/2008 for the course GENERAL ED MMW 1,2; E taught by Professor Vandehey during the Spring '08 term at UCSD.
 Spring '08
 Vandehey

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