Question

Suppose that real GDP per capita in the United States is $44,000. If the long-term growth rate of real GDP per capita is 2.4% per year, how many years will it take for real GDP per capita to reach $88,000?

Answer 1

Using the Rule of 70, it would take approximately 29 years for the GDP per capita to double from $44,000 to $88,000 with a growth rate of 2.4% per year.

Step-by-step explanation:

To calculate how many years it will take for the real GDP per capita to double from $44,000 to $88,000 at an annual growth rate of 2.4%, we use the Rule of 70. This rule states that the number of years required for a quantity to double at a constant growth rate can be approximated by dividing 70 by that growth rate (expressed as a whole number). In this case, we divide 70 by 2.4 to get approximately 29.17 years. Therefore, it will take about 29 years for the real GDP per capita in the United States to reach $88,000 if it grows at a steady rate of 2.4% per year.