Assume that both Japan's and the United States' average annual per capita GDP growth rates are 2 percent per year, and both countries began with an initial per capita GDP of $1,000. However, the United States has been growing since 1910 and Japan only since 1960. In 2010, the United States would have been ________ than Japan.
A) 0.37 times poorer
B) 99 times richer
C) 2.69 times richer
D) 4,555 times richer
E) 0.269 times poorer

Question

Quizplus · Accepted Answer

To calculate the per capita GDP of each country in 2010, we can use the formula:

Per Capita GDP = Initial Per Capita GDP x (1 + growth rate)^number of years

For the United States: 
Per Capita GDP = $1,000 x (1 + 0.02)^100 = $7,244.59

For Japan: 
Per Capita GDP = $1,000 x (1 + 0.02)^50 = $3,344.24

Therefore, the United States would have been 2.69 times richer than Japan in 2010.

Assume That Both Japan's and the United States' Average Annual