Real GDP per capita, growing at a constant rate over a 35-year period, has doubled at the end of that period. What must the annual growth rate of real GDP per capita be for this economy?

Question

Quizplus · Accepted Answer

The annual growth rate required for real GDP per capita to double over a 35-year period can be found using the Rule of 70, which states that the doubling time of an investment can be found by dividing 70 by the annual growth rate. Rearranging this formula to solve for the growth rate gives us the growth rate = 70 / doubling time. Substituting 35 years for the doubling time, we get a growth rate of approximately 2% per year.

Real GDP Per Capita, Growing at a Constant Rate Over