Chapter 37, Problem 4MCQ

To determine

To find:

Average annual rate of growth of real GDP per capita.

Explanation of Solution

The correct option is B

To compute the growth rate of the GDP we use the rule of 70.

Rule of 70 approximately computes how many years it takes for the GDP to double.

  $\text{Period}\text{=}\frac{\text{70}}{\text{Growth}\text{rate}}$

 We know that period = 10 years,

  $10\text{=}\frac{\text{70}}{\text{Growth}\text{rate}}$

Growth rate = 7.

Option A 3.5% incorrect

Option C 10% incorrect

Option D 70% incorrect

Option E 700% incorrect

Economics Concept Introduction

The rule of 70 is used to calculate the time duration of which a variable is going to double.

To compute the growth rate of the GDP we use the rule of 70.

Rule of 70 approximately computes how many years it takes for the GDP to double.

  $\text{Period}\text{=}\frac{\text{70}}{\text{Growth}\text{rate}}$