Real GDP per person in the United States was $9,864 in 1950. Over the next 48 years, it grew at a compound annual rate of 2.0 percent. If, instead, real GDP per person had grown at an average compound annual rate 2.5 percent, then real GDP per capita in the United States in 1998 would have been approximately ________ larger.

Question

Quizplus · Accepted Answer

1998 U.S. real GDP = $9,864 × (1.02)⁴⁸ = $25,519. If the growth rate would have been 2.5 percent per year, the 1998 U.S. real GDP = $9,864 × (1.025)⁴⁸ = $32,270. The difference is $6,751.

Real GDP Per Person in the United States Was $9,864