Question

The following table reports real income per person for several different economies in the years 1960 and 2010. It also gives each economy's average annual growth rate during this period. For example, real income per person in Zambia was $1,412 in 1960, and it actually declined to $1,309 by 2010. Zambia's average annual growth rate during this period was -0.15%, and it was the poorest economy in the table in the year 2010.

The real income-per-person figures are denominated in U.S. dollars with a base year of 2005. The following exercises will help you to understand the different growth experiences of these economies.

Economy	Real Income per Person in 1960	Real Income per Person in 2010	Annual Growth Rate
	(Dollars)	(Dollars)	(Percent)
Austria	9,773	35,031	2.59
Venezuela	7,307	9,762	0.58
Botswana	468	9,515	6.21
Malaysia	1,624	11,863	4.06
Honduras	1,932	3,146	0.98
Zambia	1,412	1,309	-0.15

Indicate which economy satisfies each of the following statements.

Statement	Austria	Botswana	Honduras	Malaysia	Venezuela	Zambia
This economy experienced the fastest rate of growth in real income per person from 1960 to 2010.
This economy had the highest level of real income per person in the year 2010.

Consider the following list of four countries. Which economy began with a level of real income per person in 1960 that was well below that of Venezuela and grew fast enough to catch up with and surpass Venezuela's real income per person by 2010?

Austria

Botswana

Honduras

Malaysia

Answer 1

(1)

Economy experienced fastest growth rate in real income per person - Botswana (growth rate = 6.21%)

Economy with highest level of real income per person in 2010 - Austria (real income per person = $35,031)

(2)

Malaysia began with a level of real income per person in 1960 that was below that of Venezuela ($1,624 < $7,307) and grew fast enough to catch up with and surpass Venezuela's real income per person by 2010 ($11,863 > $9,762).