Assume that Mexico's average annual per capita GDP growth rate is 3 percent per year,while Argentina's is 2.5 percent.Next,assume that both countries began with an initial per capita GDP of $1,000 in 1950.By 2000,per capita GDP would have been __________ in Mexico and __________ in Argentina.

Question

Quizplus · Accepted Answer

We can use the formula for compound interest to calculate the per capita GDP in each country:

Mexico: $1,000*(1+0.03)^{50} = $4,384.52
Argentina: $1,000*(1+0.025)^{50} = $3,437.35

Therefore, the answer is D, with Mexico having a per capita GDP of $4,384 and Argentina having a per capita GDP of $3,437.

Assume That Mexico's Average Annual Per Capita GDP Growth Rate