Question

If GDP per capita is $20,000 and the economy is growing at an annual rate of 2 percent, then the GDP per capita after 40 years is:

a) $26,727
b) $29,664
c) $32,859
d) $36,340

Answer 1

To calculate the GDP per capita after a certain number of years with a given annual growth rate, use the formula New GDP Per Capita = Old GDP Per Capita * (1 + Growth Rate)^Number of Years.

Step-by-step explanation:

To calculate the GDP per capita after a certain number of years with a given annual growth rate, you can use the formula:

New GDP Per Capita = Old GDP Per Capita * (1 + Growth Rate)Number of Years

For example, if the GDP per capita is $20,000 and the economy is growing at an annual rate of 2 percent, the GDP per capita after 40 years can be calculated as:

$20,000 * (1 + 0.02)40 ≈ $36,340

Therefore, the correct answer is option d) $36,340.