Since the early 1990s, the average rate of growth of per capita real GDP in Moza
ID: 1169108 • Letter: S
Question
Since the early 1990s, the average rate of growth of per capita real GDP in Mozambique has been 3 percent per year, as compared with a growth rate of 8 percent in China. Refer to Table 9-3 on page 203. If a typical resident of each of these nations begins this year with a per capita real GDP of $3,000 per year, about how many more dollars' worth of real GDP per capita would the person in China be earning 10 years from now than the individual in Mozambique?
TABLE 9-3 One Dollar Compounded Annually at Different Interest Rates Here we show the value of a dollar at1 the end of a specified period during which it has been compounded Interest Rate Number of Years 3% 1.03 1.04 1.05 1.06 1.08 1.10 1.20 1.06 1.08 1.10 1.12 1.17 1.21 1.44 1.09 1.12 1.16 1.19 1.26 1.33 1.73 1.13 1.17 1.22 1.26 1.36 1.46 2.07 1.16 1.22 1.28 1.34 1.47 1.61 2.49 1.19 1.27 1.34 1.41 1.59 1.77 2.99 1.23 1.32 1.41 1.50 1.71 1.94 3.58 1.27 1.37 1.48 1.59 1.85 2.14 4.30 1.30 1.42 1.55 1.68 2.00 2.35 5.16 1.34 1.48 1.63 1.79 2.16 2.59 6.19 1.81 2.19 2.65 3.20 4.66 6.72 38.30 2.43 3.24 4.32 5.74 10.00 17.40 237.00 3.26 4.80 7.04 10.30 21.70 45.30 1,470.00 4.38 7.11 11.50 18.40 46.90 117.00 9,100.00 4% 5% 6% 8% 10% 20% 2 annually at a specified interest rate. For example, if you took $1 today and invested it at 5 peroent per year, it would yield $1.05 at the end of one year. At the end of 10 years, it would equal $1.63, and at the end of 50 years, it would equal $11.50. 4 10 30 2 50Explanation / Answer
Gross domestic product (GDP): This is the value of all finished goods produced in a specific year domestically.
GDP per capita: This is the division of GDP by the total population of country.
a. At 3% growth rate $3,000 after 10 year = $3,000 × 1.34 = $4,020
b. At 8% growth rate $3,000 after 10 year = $3,000 × 2.16 = $6,480
More dollar of GDP per capital of the country C = a – b
= $6,480 - $4,020
= $2,460 (Answer)