Effect of Sustained Economic Growth
What is the Effect of Sustained Economic Growth?
Written by Jason Gordon
Updated at March 17th, 2023
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What is the Effect of Sustained Economic Growth?
Nothing is more important for people’s standard of living than sustained economic growth. Even small changes in the rate of growth, when sustained and compounded over long periods of time, make an enormous difference in the standard of living.
The following formula is used to calculate what GDP will be at the given growth rate in the future:
GDP at starting date × (1 + growth rate of GDP)years = GDP at end date
For example, an economy that starts with a GDP of 100 and grows at 3% per year will reach a GDP of 209 after 25 years; that is, 100 (1.03)25 = 209.