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27 August, 03:17

Suppose a panel of economists is predicting that a nation's real GDP per capita will double in approximately 10 years. Based upon the Rule of 70, what must be the predicted annual growth rate of real GDP per capita?

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  1. 27 August, 04:56
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    The answer is: 7% annual growth rate

    Explanation:

    The Rule of 70 is a way to determine how many years it will take an economy to double its GDP (or GDP per capita) with a given annual growth rate.

    The formula used by the Rule of 70 is:

    number of years = 70

    to double an economy annual percentage growth rate

    In this exercise we substitute the known variables and calculate:

    10 years = 70 / (annual growth rate)

    annual growth rate = 70 / 10 = 7%
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