Assume that both Japan's and the United States' average annual per capita GDP growth rates are 2 percent per year, and both countries began with an initial per capita GDP of $1,000. However, the United States has been growing since 1915 and Japan only since 1965. In 2015, the United States would have been ________ than Japan.
A) 0.37 times poorer
B) 99 times richer
C) 2.69 times richer
D) 4,555 times richer
E) 0.269 times poorer

Question

Quizplus · Accepted Answer

To calculate the GDP in 2015 for both countries, we can use the formula: 
GDP = initial GDP x (1+growth rate)^number of years
For the United States: 
GDP = $1,000 x (1+0.02)^100 = $7,172. This means that the United States is 7.172 times richer than it was in 1915.
For Japan: 
GDP = $1,000 x (1+0.02)^50 = $2,690. This means that Japan is 2.69 times richer than it was in 1965.
Comparing the two countries, we get: 
$7,172 (United States' GDP) / $2,690 (Japan's GDP) = 2.67. 
Therefore, the United States was 2.69 times richer than Japan in 2015.

Assume That Both Japan's and the United States' Average Annual