Suppose that real GDP starts at 200 and grows at a rate of 9 percent per year for two years. In the third year real GDP would be

Question

Quizplus · Accepted Answer

The formula to calculate the future value of real GDP after n years with a growth rate of r is as follows:

Future Value = Present Value * (1+r/100)^n

Using this formula, we can calculate the value of real GDP after three years as follows:

Future Value = 200 * (1+9/100)^2
Future Value = 200 * 1.09 * 1.09
Future Value ≈ 237.62

Therefore, the answer is C) 237.62.

Suppose That Real GDP Starts at 200 and Grows at a Rate