4. Solve the following problem that we discussed in class from the chapter on Ec

Question

4. Solve the following problem that we discussed in class from the chapter on Economic Growth: Assume the following problem is based on 2013 economic data for the following countries: United States (Industrially Advanced) Chile (Transition Economy) Real GDP $24,000 billion population- 300 million Real GDP = $2,000 billion population = 100 million a. Based on the data above, calculate real GDP per capita for the United States and Chile? b. What is the rule of 70? c. Assuming that real GDP per capita in Chile grows at the rate of 5 percent per year, how long will it take for Chile's economy to double? d. How many years will it take for Chile's economy to reach the level of the United States real GDP per capita in 2013? e. Based on the textbook, what has led to the miracle of growth in Chile?

Explanation / Answer

(a) Real GDP per capita = Real GDP / Population

United States: $24,000 billion / 300 million = $24,000,000 million / 300 million = $80,000

Chile: $2,000 billion / 100 million = $2,000,000 million / 100 million = $20,000

(b) Rule of 70 states that approximate time by when a variable will double in value is 70 divided by periodic growth rate of the variable.

(c) Doubling period for Chile = 70 / 5 = 14 years

(d) Therefore,

Real GDP per capita for Chile will become $40,000 (Double of $20,000) in 14 years.

Real GDP per capita for Chile will become $80,000 (Double of $40,000 and 2013 value for US) in another 14 years.

Total time taken (years) = 14 + 14 = 28

(e) Your textbook information is not available with this question and question cannot be answered.

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.