Suppose that a panel of economists predicts that a nation's real GDP per capita will double in approximately 20 years. According to the rule of 70, what must be the predicted annual growth rate of real GDP per capita?

Question

Quizplus · Accepted Answer

The rule of 70 states that the number of years it takes for a variable to double is approximately equal to 70 divided by the annual growth rate of the variable. So, if real GDP per capita is predicted to double in 20 years:
70/annual growth rate = 20 
Solving for the annual growth rate: 
annual growth rate = 70/20 = 3.5%

Suppose That a Panel of Economists Predicts That a Nation's