GDP in a country grew from $10 billion to $14 billion over the span of 5 years.The average annual growth rate of GDP was
A)4%.
B)7%.
C)10%.
D)40%.

Question

Quizplus · Accepted Answer

To calculate the average annual growth rate we can use the following formula:
Average annual growth rate = [(final GDP/initial GDP)^(1/number of years)] - 1

Plugging in the given numbers:
Average annual growth rate = [(14/10)^(1/5)] - 1
Average annual growth rate = [1.4^(0.2)] - 1
Average annual growth rate = 0.07 or 7%

Therefore, the correct answer is B) 7%.

GDP in a Country Grew from $10 Billion to $14