Question

Suppose a country has real GDP of $10,000 at the beginning of the year 2005. Each year the economy grows by 5 percent. By how much will GDP rise by the end of 2007?
A) $500
B) $1,576.25
C) $1,500
D) $1,025

Answer 1

GDP will increase by $1,576.25 by the end of 2007. GDP is significant since it provides data on the size and health of an economy.

What is GDP?

The gross domestic product is the most common measure of an economy's size (GDP). A country's GDP can be computed, as can the GDP of an area (such as Tuscany in Italy or Burgundy in France) or a collection of countries.

Why is the GDP so limited?

The economic is frequently considered to be performing well when the GDP increases. Nevertheless, slow growth is an indication of a struggling economy. Improvement is negligible if GDP declines from one quarter toward the next. This often leads to decreased expenditure, declining incomes, and mass unemployment.

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