Question

1.The following table depicts statistics on GDP per capita (ie, GDP/population) in column (1) and its growth rate for the country groups (column 2) defined by GDP levels (High-income, Middle-income and Low-income). They are all expressed as real (constant) GDP.

	(1)	(2)	(3)
Country group	GDP per capita (Year 2010)	Average annual growth rate of real GDP per capita (Year 2000-2010)	GDP per capita (Year 2088)
High-income	38,293	0.9%	?
Middle-income	3,980	4.8%	?
Low-income	507	3.0%	?

1) Approximate the GDP per capita for High-income, Middle-income and Low-income groups for the year 2088, and fill in column 3 of the Table.

2)Compute the ratio of GDP per capita of the different income groups in year 2088 (expressed in the one decimal point in %)

i.Middle- to High-income group

ii.Low- to High-income group

iii. Low- to Middle income group

Answer 1

1.

Number of years (between 2010 & 2088) = 78

GDP per capita for High-income = 38293*(1+.9%)^78 = $77024.76

GDP per capita for middle-income = 3980*(1+4.8%)^78 = $154192.5

GDP per capita for low-income = 507*(1+3%)^78 = $5085.24

2.

Ratio of GDP per capita (Middle to high income) = 154192.5/77024.76 = 2.00 or 200%

Ratio of GDP per capita (low to high income) = 5085.24/77024.76 = .066 or 6.6%

Ratio of GDP per capita (low to middle income) = 5085.24/154192.5 = .033 or 3.3%