In macroeconomics, how do you calculate the percentage change in real GDP from year 1 to year 2?

• A. $\frac{NominalGDP(year2)-NominalGDP(year1)}{NominalGDP(year1)}\times 100\%$
• B. $\frac{RealGDP(year2)}{RealGDP(year1)}\times 100\%$
• C. $\frac{RealGDP(year2)-RealGDP(year1)}{RealGDP(year1)}\times 100\%$
• D. $\frac{RealGDP(year1)-RealGDP(year2)}{RealGDP(year2)}\times 100\%$

Answer: (C)

Verified step by step guidance

1. Step 1: Understand that the percentage change in real GDP measures how much the real GDP has increased or decreased from year 1 to year 2, expressed as a percentage of the real GDP in year 1.
2. Step 2: Identify the real GDP values for both years: \( Real\ GDP(year\ 1) \) and \( Real\ GDP(year\ 2) \). These values are adjusted for inflation, unlike nominal GDP.
3. Step 3: Calculate the change in real GDP by subtracting the real GDP of year 1 from the real GDP of year 2: \( Real\ GDP(year\ 2) - Real\ GDP(year\ 1) \).
4. Step 4: Divide the change in real GDP by the real GDP of year 1 to find the proportionate change: \[ \frac{Real\ GDP(year\ 2) - Real\ GDP(year\ 1)}{Real\ GDP(year\ 1)} \].
5. Step 5: Multiply the result by 100 to convert it into a percentage: \[ \left( \frac{Real\ GDP(year\ 2) - Real\ GDP(year\ 1)}{Real\ GDP(year\ 1)} \right) \times 100\% \]. This gives the percentage change in real GDP from year 1 to year 2.