How large will Canada's GDP be 25 years from now? The answer depends on what the rate of growth in GDP will be over that 25-year period. A mathematical formula we can use for this calculation is the following:
GDP2036 = GDP2011 (1+g)25
where GDP2036 is the level of GDP in the year 2036, GDP2011 is the level of GDP in the year 2011, and g is the growth rate in GDP.
a) Assume that the GDP in 2011 is $1500 million.
i) Assume that the value of g is 0.035 (3.5%). What will the value of GDP be in 2036?
ii) What does this say about the importance of policies that promote even slightly higher rates of growth in GDP?