According to the rule of 70, if a country's real GDP per capita grows at an annual rate of 2% instead of 7%, how many additional years will it take for that country to double its level of real GDP per capita? | Homework.Study.com (2024)

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According to the rule of 70, if a country's real GDP per capita grows at an annual rate of 2% instead of 7%, how many additional years will it take for that country to double its level of real GDP per capita? | Homework.Study.com? ›

If an economy grows at 2% per year, it will take 70 / 2 = 35 years for the size of that economy to double. If an economy grows at 7% per year, it will take 70 / 7 = 10 years for the size of that economy to double, and so on.

It will take this country an additional 25 years to double its level of real GDP per capita. If it grows at 7%, then the rule of 70 indicates that this economy will double every 70 / 7 = 10 years. If instead it grows at 2%, then the rule of 70 says that this economy will double every 70 / 2 = 35 years.

Given the annual rate of economic growth, the "rule of 7 0 " ( also referred to as the rule of 7 2 ) allows one to: determine the accompanying rate of inflation. calculate the size of the GDP gap. calculate the number of years required for real GDP to double.

The rule of 70. is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to double. If real GDP per capita grows at a rate of 8.3 percent per year, it will take ___ years to double. ( rounded to one decimal place) 8.4 (70/8.3)

If real GDP grows at 7 percent per year, then real GDP will double in approximately c. 10 years. The formula for doubling is to divide 70 by the annual growth rate. In this example, dividing 70 by an annual growth rate of 7 percent yields the result of 10 years.

The Rule of 70 is a calculation that determines how many years it takes for an investment to double in value based on a constant rate of return. Investors use this metric to evaluate various investments, including mutual fund returns and the growth rate for a retirement portfolio.

The Rule of 70 Formula

Hence, the doubling time is simply 70 divided by the constant annual growth rate. For instance, consider a quantity that grows consistently at 5% annually. According to the Rule of 70, it will take 14 years (70/5) for the quantity to double.

The rule of 70 is a way to estimate the time it takes to double a number based on its growth rate. The formula is as follows: Take the number 70 and divide it by the growth rate. The result is the number of years required to double. For example, if your population is growing at 2%, divide 70 by 2.

The rule of 70 is an easy method of estimating how quickly a variable will double if you know its annual growth rate. If a variable is growing at a rate of x% per period, you simply take 70 and divide it by x. The rule of 70 is useful for all sorts of applications.

Choice of rule

Since daily compounding is close enough to continuous compounding, for most purposes 69, 69.3 or 70 are better than 72 for daily compounding. For lower annual rates than those above, 69.3 would also be more accurate than 72. For higher annual rates, 78 is more accurate.

How do you use the 70 rule? ›

Put simply, the 70 percent rule states that you shouldn't buy a distressed property for more than 70 percent of the home's after-repair value (ARV) — in other words, how much the house will likely sell for once fixed — minus the cost of repairs.

The rule of 70 is used to judge growth rate. GDP is used to measure economic growth and an economy's ability to double its GDP. The growth rate is determined by dividing 70 by the rate of growth, which determines how long GDP will take to double.

To double your money in 10 years, get an interest rate of 72/10 or 7.2%. If your country's GDP grows at 3% a year, the economy doubles in 72/3 or 24 years. If your growth slips to 2%, it will double in 36 years. If growth increases to 4%, the economy doubles in 18 years.

To calculate the economic growth rate, the growth rate of a financial measure is calculated. Gross Domestic Product, GDP measures the economy's stability and progress. To measure its growth rate, divide the GDP of a later year by the GDP of a prior year and subtract 1.

In broad terms, an increase in real GDP is interpreted as a sign that the economy is doing well. When real GDP is growing strongly, employment is likely to be increasing as companies hire more workers for their factories and people have more money in their pockets.

If your country's GDP grows at 3% a year, the economy doubles in 72/3 or 24 years. If your growth slips to 2%, it will double in 36 years. If growth increases to 4%, the economy doubles in 18 years. Given the speed at which technology develops, shaving years off your growth time could be very important.

GDP per capita is calculated by dividing the country's GDP by the country's total population. GDP per capita is used by economists along with real and nominal GDP to analyse the economic strength and growth of the country.

The real GDP growth rate formula, also known as the economic growth rate formula, is written as follows: G D P ( a n n u a l g r o w t h ) = ( R e a l G D P ( Y e a r 2 ) R e a l G D P ( Y e a r 1 ) ) − 1 . The nominal GDP may also use the same formula to calculate its growth rate.

Per capita income as a metric has limitations that include its inability to account for inflation, income disparity, poverty, wealth, or savings.