MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Question
Chapter 6, Problem 3P
To determine
Rule 70.
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A mathematical approximation called t he rule of 70 tells us that the number of years that it will take something that is growing to double in size is approximately equal to the number 70 divided by its percentage rate of growth. Thus, if Mexico’s real GDP per person is growing at 7 percent per year, it will take about 10 years (= 70 / 7) to double. Apply the rule of 70 to solve the following problem. Real GDP per person in Mexico in 2005 was about $11,000 per person, while it was about $44,000 per person in the United States. If real GDP per person in Mexico grows at the rate of 5 percent per year, about how long will it take Mexico’s real GDP per person to reach the level that the United States was at in 2005? (Hint: How many times would Mexico’s 2005 real GDP per person have to double to reach the United States’ 2005 real GDP per person?)
A mathematical approximation called the rule of 70 tells us that the number of years that it will take something that is growing to
double in size is approximately equal to the number 70 divided by its percentage rate of growth. Thus, If Mexico's real GDP per person
is growing at 7 percent per year, it will take about 10 years (= 70/7) to double. Apply the rule of 70 to solve the following problem. Real
GDP per person in Mexico in 2005 was about $12,000 per person, while it was about $48,000 per person in the United States.
A mathematical approximation called the rule of 70 tells us how long it will take for something to double in size if it grows at a constant
rate. The doubling time is approximately equal to the number 70 divided by the percentage rate of growth. Thus, if Oman's real GDP
per person is growing at 7 percent per year, it will take about 10 years (= 70 ÷ 7) to double. Apply the rule of 70 to solve the following
problem:
Real GDP per person in Oman in 2020 was about $13,000 per person, while it was about $52,000 per person in the United States. If
real GDP per person in Oman grows at the rate of 2 percent per year, about how long will it take Oman's real GDP per person to reach
the level that the United States enjoyed in 2020? (Hint. How many times would Oman's 2020 real GDP per person have to double to
reach the United States' 2020 real GDP per person?)
years
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- A mathematical approximation called the rule of 70 tells us how long it will take for something to double in size if it grows at a constant rate. The doubling time is approximately equal to the number 70 divided by the percentage rate of growth. Thus, if Panama’s real GDP per person is growing at 7 percent per year, it will take about 10 years (= 70/7) to double. Apply the rule of 70 to solve the following problem: Suppose that real GDP per person in Panama in 2017 was about $12,000 per person, while it was about $48,000 per person in the United States. If real GDP per person in Panama grows at the rate of 5 percent per year, about how long will it take Panama’s real GDP per person to reach the level that the United States was at in 2017? (Hint: How many times would Panama’s 2017 real GDP per person have to double to reach the United States’ 2017 real GDP per person?) __________ yearsarrow_forwardSuppose some hypothetical economy has experienced an annual growth rate of 4%. Top economists have identified several policies that will increase the growth rate. In order to convince government officials of the importance of their plan, they intend to compare the number of years it will take for the economy to double, based on different growth rates. Using the rule of 70, determine the number of years it will take the economy to double at each growth rate. Growth Rate (Percent) 4 5 6 Years Required to Double (Nearest whole number of years)arrow_forwardSuppose a country has a real GDP per capita of $69,000 and grows at a constant rate for the next 49 years. How much larger (in percentage terms) is this country if its growth rate is 4.13% instead of 3.05% after 49 years of growth? Answer this as a percentage and round your answer to two digits after the decimal without the percentage sign. ex. If you found the rate to be 5.125%, answer 5.13.arrow_forward
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