In Russia, GDP per capita is growing by 7.0% per year for 13 years, many times w

Question

In Russia, GDP per capita is growing by 7.0% per year for 13 years, many times would their economy grow? In Germany, GDP per capita is growing by 1.0% per year for 13 years, by how many times would their economy grow? Why are some countnes with lower levels of GDP and standards of living able to catch up to the level of more developed countries? Lesser developed countries tend to have larger populations so as the economy starts to grow them are more people they can put to work than more developed countries. Lesser developed countries can adopt already invented technologies rapidly enabling their workforce to become more productive. Workers in lesser developed countries work longer hours and thus produce more than workers in more developed countries. Wages are really low in lesser developed countries so firms can hire more people and produce mor ethan firms in more developed places.

Explanation / Answer

a) In Russia, GDP per capita is growing by 7.0% per year for 13 years

So g = 7.0% = 0.07

And N = 13

Let initially Russia’s GDP was 100,

So after 13 years with a 7.0% per year growth rate, Russia’s GDP will be, 100 x (1 + 0.07)13 = 240.9845

Russia’s Economy grew, 240.9845 / 100 = 2.41 times.

(If decimal is not allowed in the answer then it should be 2 times)

b) In Germany, GDP per capita is growing by 1.0% per year for 13 years

So g = 1.0% = 0.01

And N = 13

Let initially Germany’s GDP was 100,

So after 13 years with a 1.0% per year growth rate, Germany’s GDP will be, 100 x (1 + 0.01)13 = 113.8093

Germany’s Economy grew, 113.8093 / 100 = 1.138 times.

(If decimal is not allowed in the answer then it should be 1 times)

c) The GDP may be lower for those countries, but if population is also lower, then their GDP per capita = GDP / Population. So for many developed countries, the GDP will be lower as the population is lower. For lesser developed countries, the population will be higher and with higher population they will grow higher GDP than the other developed countries.

So the answer will be option A

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

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