Question

In 2010, Ethiopia had a per capita income of $700, about $2 per day. Compute per capita income in Ethiopia for the year 2050 assuming average annual growth is

Answer 1

a. $1,042.20

b. $1,545.62

c. $3,360.71

Step-by-step explanation:

The computations of per capita income are shown below:

a. For growth rate 1%

The per capita income would be

= Current Per capital income × (1 + growth rate)^number of years

= $700 × (1 + 0.01)^40

= $700 × 1.4888637336

= $1,042.20

b. For growth rate 2%

The per capita income would be

= Current Per capital income × (1 + growth rate)^number of years

= $700 × (1 + 0.02)^40

= $700 × 2.2080396636

= $1,545.62

c. For growth rate 4%

The per capita income would be

= Current Per capital income × (1 + growth rate)^number of years

= $700 × (1 + 0.04)^40

= $700 × 4.8010206279

= $3,360.71