Suppose two countries Warzonka and Madiz initially have the same real gross domestic product (GDP) per capita. Warzonka experiences no economic growth, while Madiz grows at a sustained rate of 5 percent. In 14 years, Warzonka's GDP will approximately be _____ of that of Madiz.

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 growth, we divide 70 by the growth rate. Here, with a 5 percent growth rate, 70/5 = 14 years. Thus, Madiz's GDP would double in 14 years, making Warzonka's GDP half of Madiz's.

Suppose Two Countries Warzonka and Madiz Initially Have the Same