Question

Suppose that real GDP per capita in the U.S. is $52,000.if the long-term growth rate of real GDP per capita is 3.0% per year,

how many years for real GDP per capita to reach $104,000?

Answer 1

ANSWER:

Real gdp per capita growth rate = 3%

real gdp per capita = $52,000

future real gdp per capita = $104,000

future real gdp per capita = real gdp per capita * (1 + real gdp per capita growth rate) ^ n

104,000 = 52,000 * (1 + 3%) ^ n

104,000 / 52,000 = (1.03) ^ n

2 = (1.03) ^ n

(1.03) ^ 23.44 = (1.03) ^ n

n = 23.44 or 24 years(approx)

so the no of years it will take for real gdp per capita to double is 24 years.