Question

Over the next 100 years, real GDP per capita in Groland is expected to grow at an average annual rate of 2.0%. In Sloland, however, growth is expected to be somewhat slower, at an average annual growth rate of 1.5%. If both countries have a real GDP per capita today of $20,000, how will their real GDP per capita differ in 100 years? Round all answers to two places after the decimal point. Groland's real per capita GDP will be $ in 100 years. Sloland's real per capita GDP will be $ in 100 years. In 100 years, Sloland's real per capita GDP will be % of Groland's.

Answer 1

Answer:

Groland's real per capita GDP will be $40,000.00  in 100 years.

Sloland's real per capita GDP will be $30,000.00 in 100 years

In 100 years, Sloland's real per capita GDP will be 75.00% of Groland's

Explanation:

Groland GDP per capita in 10 years at an average annual rate of 2.0% = 20% × 100 × $20,000 = $40,000

Sloland GDP per capita in 100 years at an average annual rate of 1.5% = 1.5% × 100 × $20,000 = $30,000

Difference in GDP per capita of Groland and Sloland = $40,000 ­ $30,000 = $10,000

Since we now know the real per capita GDP of Groland and Sloland, which are $40,000 and $30,000 respectively, Sloland’s real per capita GDP % of Groland’s per capita GDP = 30,000/40,000 × 100 = 75%

Sloland’s real per capita GDP is 75% of Groland’s.