Holding everything else unchanged, if a nation's output grows at approximately 2.4% per year and its population doubles in 45 years, calculate the approximate rate of change in per capita real GDP.

Question

Quizplus · Accepted Answer

If the population doubles in 45 years, then the annual growth rate of the population is (ln 2)/45 which is approximately 1.5% per year. 
Therefore, the growth rate of real GDP per capita is approximately 2.4% (the growth rate of real GDP) minus 1.5% (the growth rate of population) which equals 0.9%. 
Rounding this to the nearest 0.1%, we get the answer of 0.8% per year, which is choice A.

Holding Everything Else Unchanged, If a Nation's Output Grows at Approximately