A lower income economy starts off with a per capita GDP of $5,000. How large will the per capita GDP be if it grows at an annual rate of 2% for 10 years? 2% for 30 years? 4% for 10 years? 4% for 30 years?  Explain why the difference between 2% and 4% growth matters?

Exploring Economics
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ISBN:9781544336329
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Chapter20: Economic Growth In The Global Economy
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A lower income economy starts off with a per capita GDP of $5,000. How large will the per capita GDP be if it grows at an annual rate of 2% for 10 years? 2% for 30 years? 4% for 10 years? 4% for 30 years?  Explain why the difference between 2% and 4% growth matters?

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Step 1

Given data:

per capita GDP of $5,000

Annual growth rates are:

2% for 10 years

2% for 30 years

4% for 10 years

4% for 30 years

 

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