Question 1

The world's poorest country is:

Accepted Answer

According to the International Monetary Fund, the Democratic Republic of the Congo has the lowest GDP per capita, making it the poorest country in the world.

Question 2

At an annual growth rate of 0.7%, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country?

Accepted Answer

To calculate the time it takes for GDP per capita to double, we can use the rule of 70 (which is an approximation): 
70 ÷ annual growth rate (as a percentage) = number of years to double 
Therefore, 70 ÷ 0.7% = 100 years to double from $30,000 to $60,000.

Question 3

If the GDP of country X is 4 times the GDP of country Y and if the GDP of country X remains constant while GDP of country Y grows at a rate of 7% per year, which of the following statements is true?

Accepted Answer

Let the current GDP of country Y be Y.
Then, the current GDP of country X is 4Y.
Let after n years, the GDP of country Y becomes Y(1+0.07)^n = Y(1.07)^n. 
Since the GDP of country X remains constant, it will still be 4Y.
We want to find after how many years the GDP of country Y will be equal to that of country X:
4Y = Y(1.07)^n
Dividing both sides by Y:
4 = 1.07^n
Taking the natural logarithm of both sides:
ln(4) = n ln(1.07)
n = ln(4)/ln(1.07) ≈ 20.81
Therefore, it will take approximately 21 years for country Y's GDP to be equal to country X's GDP. Thus, the correct answer is B.

Question 4

For most of recorded history, economic growth has been:

Accepted Answer

For most of recorded history, economic growth was virtually nonexistent, with significant growth and improvements in living standards only occurring relatively recently, particularly after the Industrial Revolution.

Question 5

If U.S. per capita GDP is $50,000 and grows at 3% per year, what will U.S. per capita GDP be in 70 years?

Accepted Answer

To calculate the per capita GDP in 70 years, we can use the formula:
Per capita GDP in 70 years = $50,000 x (1 + 0.03)^70
Per capita GDP in 70 years = $50,000 x 10.285
Per capita GDP in 70 years = $514,250
Therefore, the closest answer choice is C, $400,000.

Question 6

At an annual growth rate of 3.5%, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country?

Accepted Answer

To estimate the time it takes for real GDP per capita to double from $30,000 to $60,000 at an annual growth rate of 3.5%, we can use the Rule of 70, which is a quick formula to estimate the doubling time of an investment's growth given a fixed annual rate of interest. The formula is 70 divided by the annual growth rate. So, 70 divided by 3.5 equals 20 years.

Question 7

At an average growth rate of 4%, approximately how long would it take for an economy to double its GDP?

Accepted Answer

Using the Rule of 70, you can estimate the doubling time by dividing 70 by the growth rate. For a 4% growth rate, 70 / 4 = 17.5 years.

Question 8

For most of recorded human history, long-run economic growth was:

Accepted Answer

For most of recorded human history, economic growth was almost nonexistent, with significant growth only beginning during the Industrial Revolution in the late 18th and early 19th centuries. Prior to this, economies were largely agrarian and static, with little change in productivity or living standards over centuries.

Question 9

Economic growth refers to the growth rate of:

Accepted Answer

The answer of Economic growth refers to the growth rate...

Question 10

At an annual growth rate of 2%, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country?

Accepted Answer

Using the formula for compound annual growth rate (CAGR), we can solve for the number of years it takes for real GDP per capita to double from $30,000 to $60,000 at a growth rate of 2%.

$30,000 * (1 + 0.02)^t = $60,000

Simplifying, we get:

(1 + 0.02)^t = 2

Taking the natural log of both sides, we get:

t * ln(1.02) = ln(2)

t = ln(2) / ln(1.02) ≈ 35. The answer is therefore C, 35 years.

Question 11

According to the rule of 70, a country with an annual growth rate of 10% will double its GDP per capita in:

Accepted Answer

The rule of 70 states that to approximate the number of years it takes for a variable to double, divide 70 by the annual growth rate. Therefore, a country with an annual growth rate of 10% would take approximately 7 years to double its GDP per capita.

Question 12

If U.S. per capita GDP is $50,000 and grows at 2% per year, what will U.S. per capita GDP be in 70 years?

Accepted Answer

The answer of If U.S. per capita GDP is $50,000...

Question 13

If U.S. per capita GDP is $50,000 and grows at 5% per year, what will U.S. per capita GDP be in 70 years?

Accepted Answer

The answer of If U.S. per capita GDP is $50,000...

Question 14

Today, real GDP per capita is about _____ as large in the richest countries as in the poorest countries.

Accepted Answer

Real GDP per capita in the richest countries is about 50 times as large as in the poorest countries, reflecting significant disparities in economic well-being and standards of living across the globe.

Question 15

If the average annual growth rate of a country increases from 2% to 3%, how much faster will its GDP double?

Accepted Answer

Using the Rule of 70, which is a way to estimate the number of years it takes for a quantity to double given a constant annual growth rate, we divide 70 by the growth rate. For a 2% growth rate, it takes 70 / 2 = 35 years to double. For a 3% growth rate, it takes 70 / 3 = approximately 23.33 years to double. The difference is 35 - 23.33 = 11.67 years, or 11 2/3 years faster.

Question 16

One key fact about economic growth around the world is that:

Accepted Answer

All countries were once poor, with economic growth and development varying significantly over time and across regions. Historical data shows that before the industrial revolution, there was little difference in income levels between what are now considered developed and developing countries.

Question 17

According to the rule of 70, a country with an annual growth rate of 7% will double its GDP per capita in:

Accepted Answer

The rule of 70 is a way to estimate the number of years it takes for a quantity to double, given a constant annual growth rate. It is calculated by dividing 70 by the annual growth rate. In this case, 70 divided by 7 equals 10 years.

Question 18

Roughly what percent of the world's population live in countries with per capita GDP lower than the average world per capita GDP?

Accepted Answer

According to the World Bank, as of 2019, the average world per capita GDP was $11,371. Based on this data, approximately 80% of the world's population lives in countries with a per capita GDP lower than this average.

Question 19

At an annual growth rate of 1.4%, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country?

Accepted Answer

To estimate the time it takes for real GDP per capita to double from $30,000 to $60,000 at an annual growth rate of 1.4%, we can use the Rule of 70, which states that the doubling time in years is approximately equal to 70 divided by the annual growth rate. Thus, 70 / 1.4 = 50 years.

Question 20

Fully 80% of the world's population live in countries with a GDP:

Accepted Answer

GDP per capita is the GDP divided by the population. Therefore, a country with a high GDP but also a high population could still have a low GDP per capita. Since 80% of the world's population live in countries with a GDP per capita less than the world average, choice C is the best answer.

Quiz 7: The Wealth of Nations and Economic Growth