Consider the following data on U. S. GDP: Year Nomlnal GDP (Billions of dollars) GDP Deflator 2014 17,348 108.71994 7,309 73.8The growth rate of nominal GDP between 1994 and 2014 was

Growth Rate of GDP =  9.03%

Explanation:

First, the question is quite jumbled together, let's make it more organized

Consider the following data on U.S. GDP:

                       Nominal GDP                         GDP Deflator

Year                (in billions of dollars)             (base year 2015)

2014                17,348                                     108.7

1994                7,309                                         73.8

The growth rate of nominal GDP between 1994 and 2014 was

Solution

The Formula for Growth Rate of Nominal GDP to be employed in the question is as follows:

GDP Growth Rate = [(GDP 2014/ GDP 1994) ∧ 1/N]    -1  x 100

N in the formula represents the number of years between the two periods

1994-2014 = 10

Based on the formula we, input the figures in the question as follows:

Growth Rate of GDP = ($17,348 Billion / $7,309 Billion)  ∧ 1/10]    -1  x 100

= 2.3731  ∧ 0.1]    -1  x 100

=1.0903 -1  x 100

= 0.903 x 100

= 9.03%

9.03%

Explanation:

To calculate the growth rate of nominal GDP (NGDP) between 1994 and 2014, we employ the formula for calculating cumulative growth rate of nominal GDP over a period longer than two periods stated as follows:

NGDPG = [(NGDPx ÷ NGDPx-1)^(1/n)] – 1 ………………………………… (1)

Where;

NGDPG = Nominal GDP growth rate = ?

NGDPx = GDP of the current or latest year in the period, i.e. 2014 GDP = $17,348

NGDPx-1 = GDP of the oldest year in the period, i.e. 1944 GDP = $7,309

n = number of years = 10

Substituting the values into equation (1) above, we have:

NGDPG = [(17,348 ÷ 7,309)^(1/10)] – 1

              = [(2.37351210835956)^0.10)] – 1

              = 1.09028276065863 – 1

NGDPG  = 0.09028276065863 = 0.903 or 9.03% approximately

The growth rate of nominal GDP between 1994 and 2014 was 9.03% .

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