Author Question: Refer to Table 22-3. Use the table above to calculate the annual growth rate in GDP. Also calculate ... (Read 74 times)

newyorker26

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Refer to Table 22-3. Use the table above to calculate the annual growth rate in GDP. Also calculate the total percentage change in the growth from 2013 through 2016.
 
  Explain the difference between the average annual growth rate in real per capita GDP from 2013 through 2016 and the total percentage change in growth from 2013 and 2016.

Question 2

The interest rate that banks charge other banks for overnight loans is the
 
  A) discount rate. B) Treasury bill rate. C) prime rate. D) federal funds rate.



anyusername12131

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Answer to Question 1

One calculates the average annual percent change in growth from 2013 through 2016 by finding the individual growth rates from year to year and then averaging them. The growth rates are calculated as follows:

2014 growth = (29,000 - 28,000 ) / 28,000 = 3.6
2015 growth = (30,000 - 29,000 ) / 29,000 = 3.4
2016 growth = (31,000 - 30,000 ) / 30,000 = 3.3
Because we are dealing with only a few years, we can approximate the average annual growth rate by averaging the growth rates for each year. The average annual growth rate is (3.6 + 3.4 + 3.3) / 3 = 3.4 (approximately--calculated to accuracy to the tenth)

The total percentage change in growth from 2013 through 2016 is calculated differently. In this case, one would find the growth rate that occurred over the entire period from 2013 through 2016. This is (31,000 - 28,000 ) / 28,000 = 10.7. Note that the calculations result in very different answers.

Answer to Question 2

D



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