Consider the following table: U.S. avg annual real gdp per capita growth rate -
ID: 1217377 • Letter: C
Question
Consider the following table: U.S. avg annual real gdp per capita growth rate - 2%, GDP per capita 2012 - $49k. China avg annual real gdp per capita growth rate - 7%, GDP per capita 2012 - $8.5 k a. If each of these countries grows at their average real GDP per capita growth rate, then how large should their GDP per capita be in 2013? In 2014? What is the predicted absolute change in GDP for each country in 2014 relative to 2012? Round your answers to the nearest dollar. b. If China continues to average this growth rate, then how large will China’s GDP per capita be in 40 years? How large will the United States’ GDP per capita be in 40 years? c. Suppose China’s average annual real GDP per capita growth rate slows to 3.5 % over the next 40 years. Now how large will China’s GDP per capita be in 40 years? please label answers a, b, c. Thanks!Explanation / Answer
(a)
(i) US
GDP per capita, 2013 ($) = 49,000 x 1.02 = 49,980
GDP per capita, 2014 ($) = 49,980 x 1.02 = 50,980
Absolute change ($) = 50,980 - 49,000 = 1,980
(ii) China
GDP per capita, 2013 ($) = 8,500 x 1.07 = 9,095
GDP per capita, 2014 ($) = 9,095 x 1.07 = 9,732
Absolute change ($) = 9,731.65 - 9,095 = 637
(b) China's GDP per capital after 40 years ($) = 8,500 x (1.07)40 = 8,500 x 14.9745 = 127,283
(c) China's GDP per capital after 40 years ($) = 8,500 x (1.035)40 = 8,500 x 3.9593 = 33,654