Question

1. Defining economic growth and the rule of 72 Aa Aa The real GDP and population data for two hypothetical countries, Hastinapur and Lanka, for the years 2009 and 2010 are given as follows. Real GDP (2009) Population (2009) Real GDP (2010) Population (2010) Hastinapur $12,256,000 16,000 $13,359,040 16,800 Lanka $2,564,000 4,000 $2,666,560 4,040 . Similarly, Lanka's real GDP Between the years 2009 and 2010, Hastinapur's real GDP grew by grew by Use the rule of 72 to help you answer the following question. For Hastinapur and Lanka, the absolute real economic growth rates (percentage change in real GDP) are 9% and 4%, respectively. If these rates of growth are sustained over a long period of time, it will take approximately years for the real GDP of Hastinapur to double. On the other hand, it will take Lanka approximately years. . Similarly, Lanka's real GDP per Between 2009 and 2010, Hastinapur's real GDP per capita grew by capita grew by In 2010, per capita real GDP of Hastinapur was higher than that of Lanka. The standard of living must be higher in Hastinapur. O False O True

Blank #1: $1,103,040 or $12,256,000 or $13,359,040 or $25,615,040?

Blank #2: $102,560 or $2,564,000 or $2,666,560 or $5,230,560?

Blank #3: 8, 13, or 18?

Blank #4: 6, 8, or 18?

Blank #5: $19, $29, or $795?

Blank #6: $19, $29, or $660?

True or False?

Answer 1

1.

Hastinapur growth in real GDP = (13359040 - 12256000)/12256000 = 0.09 or 9%

Lanks growth in real GDP = (2666560-2564000)/2564000 = 0.04 or 4%

2.

Hastinapur GDP to double = 72/9 = 8 years

Lanks GDP to double = 72/4 = 18 years

3.

Real GDP PC = Real GDP / Population

Growth in RGDPPC = Growth in GDP - Growth in population

Hastinapur:

Growth in GDP PC = 9% - 5% = 4%

Lanka:

Growth in GDP PC = 4% - 1% = 3%

4.

False

It is not necessarily true