Assume that both Japan's and the United States' average annual per capita GDP growth rates are 2 percent per year,and both countries began with an initial per capita GDP of $1,000.However,the United States has been growing since 1900 and Japan only since 1950.In 2000,the United States would have been __________ than Japan.
A)0.37 times poorer
B)99 times richer
C)2.69 times richer
D)4,555 times richer
E)0.269 times poorer

Question

Quizplus · Accepted Answer

We can use the formula for compound interest to calculate the per capita GDP of both countries in 2000.

For the United States (which started in 1900):
Per capita GDP in 2000 = $1000 x (1 + 0.02)^100 = $7,358.10

For Japan (which started in 1950):
Per capita GDP in 2000 = $1000 x (1 + 0.02)^50 = $3,103.42

Therefore, the United States' per capita GDP in 2000 was approximately 2.69 times higher than Japan's.

Therefore, the correct answer is C) 2.69 times richer.

Assume That Both Japan's and the United States' Average Annual