Question

Suppose that real GDP per capita is $50,000 and grows at a constant rate of 2%...

Suppose that real GDP per capita is $50,000 and grows at a constant rate of 2% per year. According to the rule of 70, what will the value of real GDP per capita be in 70 years?

$200,000
$50,000
$100,000
$150,000
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Answer #1

Ans:

The value of real GDP per capita be in 70 years = $200,000

Explanation

The rule of 70 is used to estimate the number of years it takes for a certain variable to double at a constant growth rate

Number of years to double = 70 / constant growth rate

= 70 / 2

= 35

As per rule 70, the value of real GDP per capita be in 35 years = $50,000 * 2

= $100,000  

The value of real GDP per capita be in 70 years = $100,000 * 2

= $200,000

     

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