Question

Small differences in annual growth rates cumulate into large differences in GDP. Shown here are the number of years it would take to double GDP at various growth rates. Doubling times can be approximated by the rule of 72. Seventy-two divided by the growth rate equals the number of years it takes to double. Growth Rate Doubling Time (Percent) (Years) 0.0 Never 0.5 144.0 1.0 72.0 48.0 1.5 2.0 36.0 28.8 2.5 3.0 3.5 24.0 20.6 18.0 4.0 4.5 16.0 5.0 14.4 13.1 5.5 6.0 12.0 6.5 11.1 10.3 7.0 7.5 8.0 9.6 9.0

Answer 1

ANSWER:

A) 3.5%

N = 72 / 3.5 = 20.6 YEARS

B) 1.5%

N = 72 / 1.5 = 48 YEARS

C) 6.5%

N = 72 / 6.5 = 11.1 YEARS