Use the \"rule of 70\" to answer the questions on economic growth provided below
ID: 1166233 • Letter: U
Question
Use the "rule of 70" to answer the questions on economic growth provided below Number If annual real GDP per capita growth in South Africa averages 1.8%, how long will it take the country to double its real GDP per capita? (please provide your answer to the nearest year, if required) Ye a rs Number If Ireland took 15 years to double its real GDP per capita, what was its average annual GDP per capita growth rate during this period? (Please give your answer to two decimal places, if required) If annual real GDP per capita growth in Tanzania averages 0.8% per year how long will it take the country to quadruple its real GDP per capita? (please provide your answer to the nearest year, if required) Number Ye ars If China took 40 years to increase its real GDP per capita eight fold, what was its average economic growth during this period? (Please give your answer to two decimal places, if required) NumberExplanation / Answer
Answer
According to Rule of 70 In order to calculate amount of years required to double the amount we have to solve the following:
Years required to double = 70/Annual percentage growth rate
a) Annual % growth rate = 1.8%,
Years required to double = 70/1.8 = 39 Years
b) 15 = 70/ Annual gdp growth rate
=> Annual GDP growth rate = 70/15 = 4.67%.
c) Annual % growth rate = 0.8%,
Years required to double = 70/0.8 = 87.5 Yrs and
in order to further double we again required 70/0.8 years = 87.5 years
Hence Real GDP quadrupole after 175 Years.
d)
As it takes 70/Annual % growth rate to double our GDP, It will take 140/Annual % growth rate to quadrupole our GDP and as 2*2*2=8 It will take 210/Annual % growth rate to eightfold(Using Rule of 70).
Years required to eightfold = 210/Annual % growth rate
=> Annual % growth rate = 210/40
Annual % growth rate = 5.25%
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