Question

Suppose that GDP was 200 billion in year 1. What is the percentage change in GDP if it increases to 220 billion in year 2?

A) 10%
B) 20%
C) 5%
D) 15%

Answer 1

The percentage change in GDP from year 1 to year 2 is calculated by subtracting the original GDP from the new GDP, dividing by the original GDP, and then multiplying by 100. In this example, the GDP increased from 200 billion to 220 billion, leading to a 10% increase.The correct answer is option A.

Step-by-step explanation:

The question asks us to calculate the percentage change in GDP from year 1 to year 2. To find this, we use the formula for percentage change which is (New Value - Original Value) ÷ Original Value × 100. In this case, the GDP increased from 200 billion to 220 billion.

First, we calculate the change in GDP: 220 billion - 200 billion = 20 billion. Next, we divide this change by the original GDP: 20 billion ÷ 200 billion = 0.10. Finally, we convert this number into a percentage by multiplying by 100: 0.10 × 100 = 10%.

Therefore, the percentage change in GDP is 10%, which corresponds to option A).