Real GDP per person in the Canada was $7,377 in 1950. Over the next 48 years it grew at a compound annual rate of 2.0%. If instead real GDP per person had grown at an average compound annual rate 2.5%, then real GDP per capita in the Canada in 1998 would have been approximately ______ larger.

Question

Quizplus · Accepted Answer

To find the difference, calculate the future value of GDP per person for both growth rates over 48 years and subtract them. At 2.0%, the future value is $7,377 * (1.02)^48. At 2.5%, it's $7,377 * (1.025)^48. The difference is approximately $5,050.

Real GDP Per Person in the Canada Was $7,377 in 1950