ter 7 Homework The fictitious country Alpha\" has a real GDP per person of $10,0
ID: 1136734 • Letter: T
Question
ter 7 Homework The fictitious country Alpha" has a real GDP per person of $10,000. Instructions: Enter your responses rounded to two decimal places a. If Alpha has a 2% growth rate in real GDP per person, then after 10 years Alpha's real GDP per person is $ b. If Alpha has a 35% growth rate in real GDP per person, then after 10 years Alpha's real GDP per person is $ c. After 10 years, the difference in Alpha's real GDP per person based on the two growth iates s s peO ook rint KPrex 8 of 10 Next e to searchExplanation / Answer
ANSWER:
1) When growth rate is 2%
real gdp per person = $10,000
n =10 years
after 10 years alpha gdp growth rate per person = real gdp per person * ( 1 + growth rate) ^ n
after 10 years alpha gdp growth rate per person = 10,000 * ( 1 + 2% ) ^ 10
after 10 years alpha gdp growth rate per person = 10,000 * (1.02) ^ 10
after 10 years alpha gdp growth rate per person = 10,000 * 1.2189
after 10 years alpha gdp growth rate per person = $12,189.9442
2) When growth rate is 3.5%
real gdp per person = $10,000
n =10 years
after 10 years alpha gdp growth rate per person = real gdp per person * ( 1 + growth rate) ^ n
after 10 years alpha gdp growth rate per person = 10,000 * ( 1 + 3.5% ) ^ 10
after 10 years alpha gdp growth rate per person = 10,000 * (1.035) ^ 10
after 10 years alpha gdp growth rate per person = 10,000 * 1.4105
after 10 years alpha gdp growth rate per person = $14,105.98
3) difference between the two growth rates based on real gdp per person = $14,105.98 - $12,189.94 = $1,916.04
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