If real GDP grows by 3% in 2013, 3.2% in 2014, and 2.5% in 2015, what is the average annual growth rate of real GDP?

Question

Quizplus · Accepted Answer

To find the average annual growth rate of real GDP, we need to use the formula:
[(Ending value / Beginning value)^(1/number of years)] - 1

Using the values given:
[(1.025 x 1.032 x 1.03)^(1/3)] - 1 = 0.029 or 2.9%

Therefore, the average annual growth rate of real GDP is 2.9%. Answer choice B is correct.

If Real GDP Grows by 3% in 2013, 3