Homework Answers
From 1920 to 1992, that is, within 72 years, the GDP of economy B became twice of GDP of economy A
Initially both had same GDP
This implies that GDP A = GDP B at the beginning
GDP B (1 + rB)^72 = 2 * GDP A (1 + rA)^72
GDP A (1 + rB)^72 = 2 * GDP A (1 + 2%)^72
(1 + rB)^72 = 8.3222
rB = 8.3222^(1/72) - 1 = 2.98%
Hence, growth rate of economy B is 2.98%
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