Ch15Answers - CHAPTER 15 ECONOMIC GROWTH PROBLEMS 1 China's...

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ECONOMIC GROWTH PROBLEMS 1. China’s output grew at an amazing rate of 10 percent per year in the 1990s. At that rate how long will it take for China's GDP to double? (see Table 15.1). With its population increasing at 0.6 percent per year, how long will it take for per capita GDP to double? At 10 percent a year, China’s GDP would double in 7.2 years (72/10). With population growing at 0.6 percent a year, the growth rate per capita is the growth rate of GDP subtracted by the growth rate of the population, in this case 10 - .06 = 9.4 percent. Using the Rule of 72 (72/9.4), it would take 7.7 years for China’s GDP per capita to double. 2. If real GDP is growing at 3 percent a year, how long will it take for: a. Real GDP to double? b. Real GDP per capita to double if the population is increasing each year by i. 0 percent? ii. 1 percent? iii. 2 percent? With real GDP growing at 3 percent a year: (a) Real GDP will double in 24 years (check Table 15.1 on page 341 or use "rule of 72" so that 72/3 = 24) (b) Real GDP per capita will double in i. 24 years. (72/3)
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