1. Suppose country A has a GDP of 1 trillion U.S. dollars and suppose this GDP g
ID: 1134845 • Letter: 1
Question
1. Suppose country A has a GDP of 1 trillion U.S. dollars and suppose this GDP grows at a constant rate of 3% per year. a. Estimate what the GDP would be 10 years from now. b. Estimate what the GDP would be 50 years from now. c. Estimate what the GDP would be 100 years from now. 2. Consider the following table. Note the values are per capita GDP measured in 2011 US Dollar real values. Country 2014 United States 29,28851,958 43,376 11,945 15,521 1980 Canada 24,716 Mexico a. Determine the per capita GDP growth rate for the U.S. from 1980 to 2014. b. Determine the per capita GDP growth rate for Canada from 1980 to 2014 c. Determine the per capita GDP growth rate for Mexico from 1980 to 2014. 3. Suppose Xt grows at 2% per year and yt grows at 5% per year, with xo 2 and yo 1 Calculate the value for zt when t-10 for zt (x)34(y)1/4.Explanation / Answer
(1) GDP after N years ($ Trillion) = 1 x (1 + r)N, where r: Annual GDP growth rate = (1.03)N
(a) GDP after 10 years ($ Trillion) = 1 x (1.03)10 = 1 x 1.3439 = 1.3439
(b) GDP after 50 years ($ Trillion) = 1 x (1.03)50 = 1 x 4.3839 = 4.3839
(a) GDP after 100 years ($ Trillion) = 1 x (1.03)100 = 1 x 19.2186 = 19.2186
(2)
(a) Growth rate = (51,958/29,288) - 1 = 1.7740 - 1 = 0.7740 = 77.40%
(b) Growth rate = (43,376/24,716) - 1 = 1.7550 - 1 = 0.7550 = 75.50%
(a) Growth rate = (15,521/11,945) - 1 = 1.2994 - 1 = 0.2994 = 29.94%
NOTE: As per Answering Policy, first 2 questions have been answered.
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