Question

The Real GDP of a country grew from $20 billion to $22.082

billion over the span of 5 years. Calculate the average annual
growth rate over this time period to two decimal places.
_______%

Answer 1

The average annual growth rate of the country's Real GDP, which increased from $20 billion to $22.082 billion over 5 years, is calculated using the compound annual growth rate formula and is found to be 1.99%.

Step-by-step explanation:

To calculate the average annual growth rate of a country's Real GDP that grew from $20 billion to $22.082 billion over 5 years, we can use the formula for compound annual growth rate (CAGR):

CAGR = ((Ending Value / Beginning Value)1/n - 1) * 100

Where:

• Ending Value = $22.082 billion
• Beginning Value = $20 billion
• n = number of years = 5

Plugging these values into the formula, we get:

CAGR = (($22.082 billion / $20 billion)1/5 - 1) * 100

CAGR = ((1.1041)1/5 - 1) * 100

CAGR = (1.019896) - 1) * 100

CAGR = 0.019896 * 100

CAGR = 1.99%

Therefore, the average annual growth rate of the Real GDP over the 5 years is 1.99%.