The four-quarter, or "year-over-year" growth rate, compares the level of GDP in one quarter to the level of GDP in the same quarter of the previous year. This is because the effects of any one-time-only factors during the quarter, labour disputes for example, become compounded when the rate is annualized. But it also tends to be volatile (see bars in Chart). It does a good job of showing recent economic developments. So the quarterly growth at an annual rate was reported at 0.4 per cent. If the economy had grown at that pace for an entire year, the annual growth would be 0.4 per cent. (This process is often called "annualizing.") For example, in the second quarter of 2001, the economy grew 0.1 per cent from the first quarter. Quarterly growth at an annual rate shows the change in real GDP from one quarter to the next, compounded into an annual rate. The four-quarter or "year-over-year" growth rate.The three most common ways to measure real GDP are: It is important to know which is being used, and to understand the differences among them. There are at least three different ways to measure growth of real GDP. The word "real" means that the total has been adjusted to remove the effects of inflation. GDP is the total value of everything - goods and services - produced in our economy. The most common way to measure the economy is real gross domestic product, or real GDP. Economists use many different methods to measure how fast the economy is growing.
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