Question

Real GDP in the US (in 2012 Dollars) was $15.6 trillion in 2007 and $18 trillion in 2017. The growth rate for Real GDP averaged 3.3% in the 15 years before 2007 but has only averaged 1.5% since then due to the effect of the Global Financial Crisis.

How much larger would Real GDP in the US be in 2017 if economic growth had continued at the same pace as before the crisis?

Answer 1

The real GDP growth rate before the crisis was averaged 3.3%

Real GDP in 2007 = $15.6 trillion

Growth rate = 3.3% or 0.033

Time period = 10 years

Calculate real GDP in 2017 -

Real GDP in 2017 = Real GDP in 2007 * (1+growth rate)^{Time period}

Real GDP in 2017 = $15.6 trillion * (1+0.033)¹⁰

Real GDP in 2017 = $15.6 trillion * (1.033)¹⁰

Real GDP in 2017 = $15.6 trillion * 1.3835 = $21.58 trillion

Thus,

The real GDP in US in 2017 at growth rate before the crisis would be $21.58 trillion.

So,

The real GDP would be larger by ($21.58 trillion - $18 trillion) $3.58 trillion in 2017 if economic growth had continued at the same pace as before the crisis.