If an economy's real GDP doubles in fourteen years, then the average annual rate of growth in real GDP is about:

Question

Quizplus · Accepted Answer

To find the average annual rate of growth in real GDP, we need to use the rule of 72. The rule of 72 is a shortcut formula used to estimate how long it will take for a variable to double in value, given a fixed growth rate.

The formula is:

Years to double = 72 / (annual growth rate)

In this case, we know that real GDP doubled in 14 years. So, we can use the formula to find the average annual growth rate:

14 = 72 / (annual growth rate)

Solving for the annual growth rate, we get:

Annual growth rate = 72 / 14 = 5.14

Therefore, the average annual rate of growth in real GDP is about 5 percent.

If an Economy's Real GDP Doubles in Fourteen Years, Then