If real GDP grows at an average rate of 3% per year, it will double in approximately _____ years.

Question

Quizplus · Accepted Answer

The rule of 72 can be applied to estimate the number of years it takes for GDP to double, which states that the number of years it takes for an investment to double in value is approximately 72 divided by the annual rate of return. Therefore, 72/3 = 24, which means real GDP will double in about 24 years. However, since 3% per year is an average rate, we should divide 72 by the average growth rate (3%) divided by 100, which gives us 72/(3/100) = 2400/3 = 800. Therefore, it will take approximately 800/3 = 266.67 years to double real GDP. Rounded to the nearest whole number, the answer is C) 23.

If Real GDP Grows at an Average Rate of 3