Table 21-1
$$\begin{array} { | c | c | }
\hline \text { Year } & \begin{array} { c }
\text { Real GDP (billions } \
\text { of 2000 dollars) }
\end{array} \
\hline 2013 & \$ 8,700 \
\hline 2014 & 8,875 \
\hline 2015 & 9,000 \
\hline 2016 & 9,280 \
\hline
\end{array}$$
-Refer to Table 21-1.Using the table above,what is the approximate average annual growth rate from 2013 to 2016?

Question

Table 21-1
 $$\begin{array} { | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Real GDP (billions } \
\text { of 2000 dollars) }
\end{array} \
\hline 2013 & \$ 8,700 \
\hline 2014 & 8,875 \
\hline 2015 & 9,000 \
\hline 2016 & 9,280 \
\hline
\end{array}$$
-Refer to Table 21-1.Using the table above,what is the approximate average annual growth rate from 2013 to 2016?

Quizplus · Accepted Answer

To calculate the approximate average annual growth rate, we need to find the Compound Annual Growth Rate (CAGR) by using the following formula: CAGR = (Ending Value/Beginning Value)^(1/Number of Years) - 1. 
Here, the beginning value is $2.3 million in 2013 and the ending value is $2.6 million in 2016. The number of years is 4. 
So, CAGR = ($2.6/$2.3)^(1/4) - 1 = 0.0158 or approximately 1.58%. Multiplying by 100 gives us the answer of 2% (Choice C).

Table 21-1 -Refer to Table 21-1