Question

The Gross National Product (GNP) is the value of all the goods and services produced in an economy, plus the value of the goods and services imported, less the goods and services exported. During the period 1994-2004, the GNP of Canada grew about 4.8% per year, measured in 2003 dollars. In 1994, the GNP was $5.9 billion. Assuming this rate of growth continues, what will the GNP of Canada be (in billions) in the year 2012?

a.$15.64
b.$2.34
c.$5.41
d.$13.72

Answer 1

y=a(1+r)^x growth formula
y=a(1-r)^x decay formula
a = amount
r = percentage rate
x = time in years

Answer 2

option d. 13.72 billion

Explanation:

Given that the Gross National Product (GNP) is the value of all the goods and services produced in an economy, plus the value of the goods and services imported, less the goods and services exported.

If we assume rate of growth as constant as 4.8% per year,

then

`P(t) =P_0 (1+r)^t`

where t= no of years and r = rate of growth per year.

Using this we can write

`P(t) = 5.9(1.048)^t\\`

No of years lapsed from 1994 to 2012 =t = 18

Hence GNP in the year 2012

=
`5.9(1.048)^(18) \\=13.72` billion

Hence answer is option d. 13.72 billion