Suppose using year 1 as the base, an economist calculated that real fixed-weight GDP in year 1 was $60,000 and the real fixed-weight GDP in year 2 was $75,000. If year 2 was the base, real fixed-weight GDP in year 1 was $55,000 and real fixed-weight GDP in year 2 was $63,800. The CW growth rate between year 1 and year 2 is: Question 1 options: 20% 25% 16% 20.50%

Suppose using year 1 as the base, an economist calculated that real fixed-weight GDP in year 1 was $60,000 and the real fixed-weight GDP in year 2 was $75,000. If year 2 was the base, real fixed-weight GDP in year 1 was $55,000 and real fixed-weight GDP in year 2 was $63,800. The CW growth rate between year 1 and year 2 is: Question 1 options: 20% 25% 16% 20.50%

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 3P

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In a rich country A, the gross domestic product 1 per person is r = 53,000 (US dollars). In a poor country B, the GDP per person is p = 7,000. Suppose that the GDP of country A grows by 5% per year, and that an economic miracle in country B begins to propel a growth of 9% per year. Assume these growth rates are constant. 1) Over how many years does the absolute difference in GDP between rich country A and poor country B increase? 2) How many years does it take for the GDP of country B to exceed that of country A? (Justify your answers.)
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