Asked by Ruben Martinez on Jul 14, 2024
Verified
The government is looking to double the living standards of its population in 18 years,what rate of GDP growth would it need to achieve that?
A) 1%
B) 2%
C) 3%
D) 4%
Living Standards
The level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.
GDP Growth
An increase in a country's gross domestic product over time, indicating economic expansion.
- Understand the impact of GDP growth on living standards over time.
Verified Answer
MF
Michael Fernando FloresJul 17, 2024
Final Answer :
D
Explanation :
In order to double the living standards of the population in 18 years, the GDP must grow at an annual rate of 4%. This is because the Rule of 70 states that the number of years it takes for a certain variable to double can be found by dividing 70 by the growth rate. Therefore, 70/4 = 17.5, which is close to the given time frame of 18 years. A GDP growth rate of 1%, 2%, or 3% would not be sufficient to double the living standards of the population within 18 years.
Learning Objectives
- Understand the impact of GDP growth on living standards over time.