Over the next 100 years, real GDP per capita in Groland is expected to grow at a

Question

Over the next 100 years, real GDP per capita in Groland is expected to grow at an average annual rate of 2.0%. In Sloland, however, growth is expected to be somewhat slower, at an average annual growth rate of 1.5%. If both countries have a real GDP per capita today of $20,000, how will their real GDP per capita differ in 100 years? Round all answers to two places after the decimal point.

Groland's real per capita GDP will be $ _____ in 100 years.

Sloland's real per capita GDP will be $ ___ in 100 years

In 100 years, Sloland's real per capita GDP will be __ % of Groland's.

Explanation / Answer

Groland's real per capita GDP will be = 20000 x (1 + 2%)100 = $ 144892.92 in 100 years

Sloland's real per capita GDP will be = 20000 x (1 + 1.5%)100 = $ 88640.91 in 100 years

In 100 years, Sloland's real per capita GDP will be = 88640.91/144892.92 x 100 = 61.18  % of Groland's.

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