Question

Consider an imaginary economy that has been growing at a rate of 3% per year. Government economists have proposed a number of policies to increase the growth rate but first need to convince the president that the policies will pay off. To do so, they want to present a comparison of the number of years it will take for the economy to double, depending on the growth rate. Using the rule of 70, determine the number of years it will take the economy to double at each growth rate. Growth Rate Years Required to Double (Percent) (Nearest whole number of years) 3 4 5

Answer 1

3% -23.33 years

4%-17.5 years

5%-14 years

Step-by-step explanation:

The rule of 70 is of the view that an economy would double its current performance in the coming years depicted by number 70 divided by its projected growth rate.

If the economy is growing at rate 3% growth rate,the economy would double its output in 23.33 years' time (70/3)

While using a growth rate of 4%,the economy would double its effort in 17.5 years' time(70/4) and finally using a growth rate of 5% it would double its effort in 14 years' time(70/5)