-Refer to the Above Table

question 249

Multiple Choice

-Refer to the above table. Country A has a per capita real GDP of $1000 and B has a per capita real GDP of $10,000. A is growing at a rate of 5 percent a year and B at a rate of 4 percent a year. After 50 years, how much larger is per capita real GDP in B than A? How much is this in real dollars?

• A) B is 8 times larger, or $175,000 larger on a real per capita basis.
• B) B is 12 times larger, or $230,000 larger on a real per capita basis.
• C) B is a little over 6 times larger, or almost $60,000 larger on a real per capita basis.
• D) B is a little less than 2 times smaller, or almost $20,000 smaller on a real per capita basis.

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Definitions:

Equal Payments

Regularly scheduled payments of the same amount over the term of a loan or mortgage.

Interest Annually

The amount of interest earned or paid over a one-year period, often expressed as a percentage of the principal.

Economic Values

The worth of goods or services as determined by their utility and the market forces of supply and demand.

Annual Rate

A fixed percentage representing the yearly cost or return of a financial product or service.