Question

Real per capita GDP in China in 1959 was about $350, but it doubled to about $700 by 1978, when Deng Xiao Ping started market reforms. Chinese per capita real GDP doubled again in only seven years, reaching $1,400 by 1986. What was the average annual economic growth rate between 1979 and 1986?

Answer 1

Answer:

10.4%

Explanation:

In macroeconomics class we are told that if an economy grows by 10%, it will take them 7 years to double its size.

The answer is not exactly 10%, but it's pretty close:

(1 + x%)⁷ = 2

1 + x% = ⁷√2

1 + x% = 1.104

x% = 1.104 -1 = 0.104 or 10.4%

We can check the answer:  1.104⁷ = 2