If an economy's steady annual growth rate falls from 3.5 percent to 2.5 percent,this adds __________ years to the time it takes for the economy to double in size.
A) 24.0
B) 8.0
C) 5.3
D) 11.4

Question

Quizplus · Accepted Answer

Using the Rule of 70, which estimates the number of years required to double an investment at a given annual rate of return, we can calculate the doubling time for both growth rates. The formula is 70 divided by the growth rate. For a 3.5% growth rate, the doubling time is 70 / 3.5 = 20 years. For a 2.5% growth rate, it's 70 / 2.5 = 28 years. The difference between these two doubling times is 8 years.

If an Economy's Steady Annual Growth Rate Falls from 3