Chapter 8: Q1. (page 173)

If real GDP grows at 7 percent per year, then real GDP will double in approximately ________ years.
a. 70
b. 14
c. 10
d. 7

Short Answer

Expert verified

Option (c) is correct. The real GDP will double in approximately 10 years.

Step by step solution

Step 1. Explaining the concept “rule of 70” to determine the required number of years for an economy to double its size

The economists use the “rule of 70” to evaluate the approximate number of years an economy will take to double its size. The mathematical expression under the rule of 70 is given below: $A p p r o x i m a t e n o . o f y r s r e q u i r e d t o d o u b l e t h e r e a l G D P = \frac{70}{A n n u a l p e r c e n t a g e r a t e o f g r o w t h}$

Step 2. Calculating annual growth rates

The required annual growth rate for a country to double its output can be calculated using the “rule of 70” formula.

Annual percentage rate of growth = 70/Approximate number of years required to double the GDP

The required annual percentage growth for a country to double its output in 7 years is:

$A n n u a l p e r c e n t a g e r a t e o f g r o w t h = \frac{70}{7} = 10 p e r c e n t$

The required annual growth rate is 10 percent. Hence, option (c) is correct.

Unlock Step-by-Step Solutions & Ace Your Exams!

Full Textbook Solutions
Get detailed explanations and key concepts
Unlimited Al creation
Al flashcards, explanations, exams and more...
Ads-free access
To over 500 millions flashcards
Money-back guarantee
We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

If real GDP grows at 7 percent per year, then real GDP will double in approximately ________ years.
a. 70
b. 14
c. 10
d. 7

Short Answer

Step by step solution

Step 1. Explaining the concept “rule of 70” to determine the required number of years for an economy to double its size

Step 2. Calculating annual growth rates

One App. One Place for Learning.

Most popular questions from this chapter

Study anywhere. Anytime. Across all devices.

If real GDP grows at 7 percent per year, then real GDP will double in approximately ________ years.a. 70b. 14c. 10d. 7

Short Answer

Step by step solution

Step 1. Explaining the concept “rule of 70” to determine the required number of years for an economy to double its size

Step 2. Calculating annual growth rates

One App. One Place for Learning.

Most popular questions from this chapter

Study anywhere. Anytime. Across all devices.

If real GDP grows at 7 percent per year, then real GDP will double in approximately ________ years.
a. 70
b. 14
c. 10
d. 7