Suppose per capita real GDP grows by 2% per year. Based on the Rule of 70, approximately how many years will it take for the level of per capita real GDP to double (i.e., increase by 100%)?
A) 3.5 years
B) 20 years
C) 35 years
D) 70 years

Question

Quizplus · Accepted Answer

The Rule of 70 states that the number of years it takes for a variable to double is approximately equal to 70 divided by the annual growth rate, expressed as a percentage. In this case, since per capita real GDP is growing by 2%, we divide 70 by 2 to get the number of years it will take for it to double, which is 35. Therefore, the best choice is C) 35 years.

Suppose Per Capita Real GDP Grows by 2% Per Year