Real GDP per person in Richland is $20,000, while real GDP per person in Poorland is $10,000. However, Richland's real GDP per person is growing at 1 percent per year, and Poorland's real GDP per person is growing at 2 percent per year. After 50 years, real GDP per person in Richland minus real GDP in Poorland is:

Question

Quizplus · Accepted Answer

For Richland, the future value equation is: Future GDP = $20,000 × (1.01)⁵⁰ = $32,893. For Poorland, the future value equation is: Future GDP = $10,000 × (1.02)⁵⁰ = $26,916. Real GDP per person in Richland minus real GDP in Poorland is $5,977.

Real GDP Per Person in Richland Is $20,000, While Real