From year 1 to year 2, the real GDP of the economy increases by 20%.
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year.
Real GDP is GDP calculated using base year prices. Real GDP has been adjusted for inflation. It reflects the value of goods and services produced in an economy.
Given the produced cookie in 1 year at price $2 cookie and 12 cookies in year 2 at a price of $3 per cookie.
Now we know ,
GDP in year 1 = 10 x $2 = 20
Real GDP in year 2 using year 1 prices as base price = 12 x $2 = $24
Therefore,
Increase in real GDP = (24 / 20) - 1 = 20%
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