Real GDP per person in both Alpha and Omega is equal to $2,000. Over the next 100 years, real GDP per person grows at a 1.5 percent annual rate in Alpha and at a 2.5 percent annual rate in Omega. After 100 years, real GDP per person in Alpha is ________ smaller than real GDP per person in Omega.
A)$2,000
B)$5,410
C)$8,864
D)$14,763

Question

Quizplus · Accepted Answer

For Alpha, the future value equation is: Future GDP = $2,000 × (1.015)¹⁰⁰ = $8,864. For Omega, the future value equation is: Future GDP = $2,000 × (1.025)¹⁰⁰ = $23,627. The difference is $14,763.

Real GDP Per Person in Both Alpha and Omega Is