Question

Assume that a "leader country" has real GDP per capita of $50,000, whereas a "follower country" has real GDP per capita of $25,000. Next suppose that the growth of real GDP per capita falls to zero percent in the leader country and rises to 5 percent in the follower country.?

Answer 1

Answer:

14 years

Explanation:

Given:

Leader country GDP = $50,000

Follower country GDP = $25,000

Growth rate of follower country = 5%

It is given that growth rate of leader country is "0" So real GDP will be $50,000.

Follower country GDP is half.

So, according to double match formula

Number of years to double = 70 years / rate of growth

Number of years to double = 70 years / 5%

Number of years to double = 14 year

So, In 14 years follower country will catch the GDP of Leader country.