Suppose Mexico's real GDP per person in 2008 is $6,000 and the U.S.real GDP per person is $24,000.Mexico has annual growth in real GDP per person of 5 percent.Approximately how many years will it take Mexico to equal $24,000 of real GDP per person?

Question

Quizplus · Accepted Answer

To solve for the number of years it will take Mexico to equal the U.S. real GDP per person, we can use the rule of 72, which states that the number of years it takes for a certain value to double is equal to 72 divided by the annual growth rate. In this case, since Mexico's real GDP per person is growing at 5 percent annually, we can use the rule of 72 to find the approximate number of years it will take for Mexico's real GDP per person to double:
72/5 = 14.4 years
This means that in approximately 14 years, Mexico's real GDP per person will be $12,000. In another 14 years, it will double again to $24,000, which means it will take Mexico approximately 28 years to reach the same level of real GDP per person as the U.S.

Suppose Mexico's Real GDP Per Person in 2008 Is $6,000