If the annual growth in a nation's productivity is 2.8 percent rather than 1.5 percent, then the nation's standard of living will double in about
A) 20 years instead of 40 years.
B) 25 years instead of 47 years.
C) 46 years instead of 70 years.
D) 55 years instead of 115 years.

Question

Quizplus · Accepted Answer

The rule of 70 is a quick way to estimate the number of years it takes for a certain variable (in this case, standard of living) to double, given a constant annual growth rate. The formula is:
Number of years to double = 70 ÷ annual growth rate
Using this formula, we can see that in the first scenario (1.5% annual growth), the number of years to double the standard of living is:
70 ÷ 1.5 = 46.67 years
In the second scenario (2.8% annual growth), the number of years to double the standard of living is:
70 ÷ 2.8 = 25 years
Therefore, the answer is B) 25 years instead of 47 years.

If the Annual Growth in a Nation's Productivity Is 2