If a Country Grows at an Average Rate of 3

question 62

Multiple Choice

If a country grows at an average rate of 3.5 percent per year, we can estimate it will double its:

• A) growth rate in 70 years.
• B) real GDP per capita in 70 years.
• C) real GDP per capita in 20 years.
• D) growth rate in 20 years.

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Definitions:

Effective (Annualized) Yield

A calculation of the annual return on an investment, taking into account the effect of compounding interest.

Consumer Price Index

An index that measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Effective Annualized Rate

The interest rate on an investment or loan on an annual basis, taking compounding into account.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.