Three countries have different levels of gross domestic product (GDP) per capita

Question

Three countries have different levels of gross domestic product (GDP) per capita and different growth rates of GDP per capita, as identified in the table. Growth rate of GDP per Country GDP per capita capita Bohemia $44,000 Andover $32,000 Catalonia $30,000 If these countries continue to grow at the rates indicated in the table, then, over the next few years, will have the highest level of GDP per capita and, in the long run, will have the highest level of GDP per capita. 2.5 percent 4 percent 1.5 percent Andover; Andover Bohemia; Catalonia Andover: Bohemia Bohemia; Bohemia Bohemia: Andover

Explanation / Answer

Ans. This is an interesting question , Let's answer or straightway :

If we keep the growth rates to be constant , then in Short Run , Bohemia would surely be having Highest Per Capita GDP because it's Per Capita GDP is highest right from the beginning and it's growth rate is also Second Best. But in long Run , Per Capita GDP of Andover would be the highest because it's growth rate is maximum ie 4% and in long term it would surely surpass Per Capita GDP of Bohemia.

So , over the next year , BOHEMIA would be having highest level of Per Capita GDP and ANDOVER would having Highest Level of Per Capita GDP in Long Run.

I hope you understood the answer . Do ask in case of Doubts.

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Best of Luck !! Keep Chegging !!

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