Country A and Country B initially have the same real GDP per capita. Country A experiences no economic growth, while Country B grows at a sustained rate of 5 percent. In 14 years, Country A's GDP will be approximately ____ that of Country B.
A)one-fourth
B)one-half
C)double
D)triple

Question

Country A and Country B initially have the same real GDP per capita. Country A experiences no economic growth, while Country B grows at a sustained rate of 5 percent. In 14 years, Country A's GDP will be approximately ____ that of Country B.
A)​one-fourth
B)​one-half
C)​double
D)​triple

Quizplus · Accepted Answer

Using the rule of 72, we can estimate that it takes about 14 years for real GDP per capita to double at a sustained growth rate of 5 percent. Therefore, in 14 years, Country B's real GDP per capita will have doubled, while Country A's real GDP per capita will have remained the same. This means that Country B's real GDP per capita will be twice that of Country A's, or one-half as the original value was the same for both countries. Thus, the correct answer is B.

Country a and Country B Initially Have the Same Real