Suppose That Real GDP Per Capita of a Rich Country

question 99

Multiple Choice

Suppose that real GDP per capita of a rich country is $40,000. Real GDP per capita in a poor country is $10,000. Suppose that rate of growth of GDP per capita in the rich country is 3.6% per year and in the poor country is 7.2% per year. Using the rule of 72, calculate how many years it will take for real GDP per capita in the poor country to catch up with GDP per capita in the rich country?

• A) 10 years
• B) 20 years
• C) 30 years
• D) 40 years

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Definitions:

Net Price

The final price after all discounts, rebates, and taxes are applied, indicating the actual cost to the buyer.

Credit Sales

Transactions in which goods or services are provided to a customer with an agreement to pay at a later date.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, illustrating how the revenues are transformed into net income or loss.

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from total revenue.