Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?

Question

Quizplus · Accepted Answer

The rule of 70 states that to find the number of years it takes for a variable to double, divide 70 by the annual growth rate. In this case, the annual growth rate is 10%, so it will take 70/10 = 7 years for real GDP to double from $20 million to $40 million. It will then take another 7 years for real GDP to double from $40 million to $80 million. So, in total, it will take 7 + 7 = 14 years for real GDP to grow from $20 million to $80 million.

Suppose a Country Is Producing $20 Million of Real GDP