Use the following table to answer the questions. Year Real GDP (billions of 2009 doll

step 1 So for this problem, we have a little bit of math to do, but as long as you have a calculator, i

Use the following table to answer the questions. Year ...

Use the following table to answer the questions. $$\begin{array}{|c|c|} \hline {\text { Year }} & {\text { Real GDP (billions of } 2009 \text { dollars) }} \\ \hline {1990} & {\$ 8,955} \\ \hline {1991} & {8,948} \\ \hline {1992} & {9,567} \\ \hline {1993} & {9,521} \\ \hline {1994} & {9,905} \\ \hline \end{array}$$ a. Calculate the growth rate of real GDP for each year from 1991 to $1994 .$ b. Calculate the average annual growth rate of real GDP for the period from 1991 to 1994 .

Use the following table to answer the questions.

$$\begin{array}{|c|c|} \hline {\text { Year }} & {\text { Real GDP (billions of } 2009 \text { dollars) }} \\ \hline {1990} & {\$ 8,955} \\ \hline {1991} & {8,948} \\ \hline {1992} & {9,567} \\ \hline {1993} & {9,521} \\ \hline {1994} & {9,905} \\ \hline \end{array}$$

a. Calculate the growth rate of real GDP for each year from 1991 to $1994 .$
b. Calculate the average annual growth rate of real GDP for the period from 1991 to 1994 .

Key Concepts

Average Annual Growth Rate

The Average Annual Growth Rate (AAGR) smooths out the rate of growth over multiple periods by determining a single annual rate that approximates the compound growth effect over the entire period. This measure is particularly useful for analyzing trends in economic performance over several years, as it provides a consistent annualized rate that reflects the overall growth trajectory during the period in question.

Growth Rate Calculation

The growth rate of an economic variable, such as real GDP, measures the percentage change from one period to the next. It is calculated by taking the difference between the current period’s value and the previous period’s value, dividing that result by the previous period’s value, and then multiplying by 100 to obtain a percentage. This calculation helps identify the rate at which an economy is expanding or contracting over a specified time period.

Real GDP

Real Gross Domestic Product (GDP) represents the value of all final goods and services produced within a country in a specific period, adjusted for inflation. This adjustment allows for comparisons of economic output over time by removing the effects of price changes, thereby providing a more accurate representation of an economy’s true growth or contraction in terms of volume.

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