Final answer:
To calculate the growth of GDP over a number of years, multiply the starting GDP by (1 plus the growth rate) raised to the power of the number of years. Even small changes in growth rates can lead to significant differences in GDP size over time due to compounding.
Step-by-step explanation:
Understanding GDP Growth Over Time
To calculate how many times the GDP will grow over x years, you can use the formula GDP at starting date x (1 + growth rate of GDP)years = GDP at end date. For example, if an economy has a starting GDP of $5,000 and it grows at an annual rate of 2% for 20 years, the calculation would be $5,000 x (1 + 0.02)20. Similarly, if you want to calculate for 40 years at 2%, 4%, or 6% growth rates, just adjust the growth rate and years accordingly in the formula.
The impact of growth rates on GDP per capita is significant over time. Even a small difference in growth rates can have a profound effect on the economy's size after several decades due to the power of compounding.