Assume that Mexico's average annual per capita GDP growth rate is 3 percent per year, while Argentina's is 2.5 percent. Next, assume that both countries began with an initial per capita GDP of $1,000 in 1965. By 2015, per capita GDP would have been ________ in Mexico and ________ in Argentina.

Question

Quizplus · Accepted Answer

We can use the compound interest formula to solve this problem:

Per Capita GDP in Mexico in 2015 = $1,000 x (1 + 0.03)^50 = $4,384.43
Per Capita GDP in Argentina in 2015 = $1,000 x (1 + 0.025)^50 = $3,437.02

Therefore, the answer is D: $4,384; $3,437.

Assume That Mexico's Average Annual Per Capita GDP Growth Rate