Question

Suppose real gdp per capita in canada is $25,000 and its annual growth rate is 7%. real gdp per capita for canada will double in

Answer 1

Applicable formula:

A = P (1+r)^n

Where;
A = Final GDP = 2P
P = Initial GDP = $25,000
r = annual growth rate  = 7% = 0.07
n = Time in which GDP will double

Therefore;
2P = P (1+0.07)^n
2P/P = (1.93)^n
2 = 1.93^n

Taking natural logs on both sides;
ln 2 = n ln 1.93
0.6931 = 0.6575n
n = 0.6931/0.6575 = 1.05 years.

Therefore, GDP will double after 1.05 years.