A country’s GDP grows at a rate of 3% per year. If the current GDP is $2 trillio

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Question: A country’s GDP grows at a rate of 3% per year. If the current GDP is $2 trillion, what will be the GDP after 3 years? (2023)

Options:

Correct Answer: $2.12 trillion

Exam Year: 2023

Solution:

GDP after 3 years = 2 trillion * (1 + 0.03)^3 = 2 trillion * 1.092727 = $2.09 trillion.

A country’s GDP grows at a rate of 3% per year. If the current GDP is $2 trillion, what will be the GDP after 3 years? (2023)

A country’s GDP grows at a rate of 3% per year. If the current GDP is $2 trillion, what will be the GDP after 3 years? (2023)

Step 1: Identify the current GDP, which is $2 trillion.
Step 2: Identify the growth rate, which is 3% per year. Convert this percentage to a decimal by dividing by 100: 3% = 0.03.
Step 3: Determine the number of years for growth, which is 3 years.
Step 4: Use the formula for future GDP: Future GDP = Current GDP * (1 + growth rate) ^ number of years.
Step 5: Plug in the values: Future GDP = 2 trillion * (1 + 0.03) ^ 3.
Step 6: Calculate (1 + 0.03) = 1.03.
Step 7: Raise 1.03 to the power of 3: 1.03 ^ 3 = 1.092727.
Step 8: Multiply the current GDP by this result: 2 trillion * 1.092727 = 2.09 trillion.
Step 9: The GDP after 3 years will be approximately $2.09 trillion.

Compound Growth – Understanding how to calculate future values using a growth rate over multiple periods.
Exponential Growth Formula – Applying the formula for compound interest or growth, which is A = P(1 + r)^n.