wo economies, Hare and Tortoise, each start with a real GDP per person of $1 comma 000 in 1950. Real GDP per person grows 4 % per year in Hare and 2 % per year in Tortoise. After 70 years, in year 2020, what will be real GDP per person in each economy?

Hare 2020 Real GDP per person = $15,572

Tortoise 2020 Real GDP per person = $3.999

Explanation:

To find the answer, we use the future value formula:

FV = PV (1 + i) ^n

Where:

FV = Future Value PV = Present Value i = growth rate n = number of years

For Hare:

FV = 1,000 (1 + 0.04) ^70

= 15,572

For Tortoise:

FV = 1,000 (1 + 0.02) ^70

= 3.999