Assume that both Mexico's and Argentina's average annual per capita GDP growth rates are 3 percent per year, and both countries began with an initial per capita GDP of $1,000. However, Argentina has been growing since 1935 and Mexico only since 1960. In 2010, Mexico's per capita GDP would have been about ________, while Argentina's would have been about ________.
A) $19.42; $12.94
B) $9,179; $4,384
C) $51,500; $77,250
D) $48,544; $72,816
E) $4,384; $9,179

Question

Quizplus · Accepted Answer

Mexico's growth period is 50 years (1960-2010), and Argentina's is 75 years (1935-2010). Using the formula for compound growth, GDP = Initial GDP * (1 + growth rate)^number of years, Mexico's GDP = $1,000 * (1.03)^50 ≈ $4,384 and Argentina's GDP = $1,000 * (1.03)^75 ≈ $9,179.

Assume That Both Mexico's and Argentina's Average Annual Per Capita