Question

Suppose real GDP per capita in Belize is $14,000 and its annual growth rate is 7% thanks to a booming tourism industry. During the same time period, the real GDP per capita of Honduras is $4,000 and its annual growth rate is 5%. How much more quickly will Belize double its real GDP than Honduras?

Answer 1

Answer:

Belize will double its GDP per capita 4 years before than Honduras.

Explanation:

First, you have to know in how many years Belize and Honduras separately will double their GDP per capita.  

Belize:

Year 0: $14,000

Year 1: $14,000 (Year 0 GDP per capita)*1.07=$ 14,980

Year 2: $14,980 (Year 1 GDP per capita )*1.07=$16,028.6

And so on, the same for Honduras:

Year 0: $4,000

Year 1: $4,000 (Year 0 GDP per capita)*1.05= $4,200

Year 2: $4,200 (Year 1 GDP per capita )*1,05= $4,410

I did this process in excel until i found the number of years that each country will take to double its GDP per capita. The table attached shows that Belize will double it in 11 years (between year 10 and year 11). Honduras will double it in 15 years (between year 14 and 15). Then, Belize will double its GDP per capita 4 years before than Honduras.