Question

Use the rule of 72 to determine how long it takes for real GDP to double if real GDP grows at 3% per year.

A) 12 years
B) 18 years
C) 24 years
D) 36 years

Answer 1

The rule of 72 helps estimate the time it takes for real GDP to double. In this case, with a growth rate of 3% per year, it will take approximately 24 years.

Step-by-step explanation:

The rule of 72 is a formula used to estimate the time it takes for an investment or a variable to double in value. To determine how long it takes for real GDP to double, we divide 72 by the annual growth rate. In this case, if the real GDP grows at a rate of 3% per year, it will take approximately 24 years for it to double. Therefore, the correct answer is option C) 24 years.

or To use the rule of 72 to determine how long it takes for real GDP to double if real GDP grows at 3% per year, divide the number 72 by the annual growth rate of 3%. The calculation is 72 ÷ 3, which equals 24 years. Therefore, at a growth rate of 3% per year, it will take approximately 24 years for the real GDP to double.