How do you calculate the growth rate of real GDP between two years?
To calculate the growth rate of real GDP between two years, you need the GDP values for both years. The formula to calculate the growth rate is as follows:
Growth Rate = ((New GDP - Old GDP) / Old GDP) * 100
Here's a step-by-step breakdown of how to calculate the growth rate of real GDP:
1. Obtain the GDP value for the starting year (old GDP) and the ending year (new GDP). Make sure both values are adjusted for inflation (i.e., real GDP).
2. Subtract the old GDP value from the new GDP value.
3. Divide the result by the old GDP value.
4. Multiply the quotient by 100 to convert it to a percentage.
The resulting growth rate will indicate the percentage change in real GDP between the two years. If the growth rate is positive, it indicates economic growth, while a negative growth rate indicates a contraction in the economy.