Econ You have to show me your work as to how you work these Problem sets. You ca

Question

Econ You have to show me your work as to how you work these Problem sets. You can do it by hand or using excel. If you use excel or manually present your work professionally and easy to underhand In 2015 the rate of economic growth per capita in Brazil is 1.8% per year, while in Venezuela it is 3.6%. The level of per capita real GDP was $28,900 in Brazil and ,$ 12, 700 inVenezuela. Assume the growth rates for each country remain the same. Which country will have a higher level of potential output in 2050 and how much will it be? Suppose that real GDP per capita of Morocco is $30,000. RGDP per capita in Andorra is 15,000. Suppose that rate of growth of real GDP per capita in Morocco is 3.17% per year and i Andorra it is 6.34% per year. Using the rule of 72. calculate how many years it will take for RGDP per capita in Andorra to catch up with RGDP per capita in Morocco.

Explanation / Answer

1. Growth rate brazil r = 1.8% per year =0.018

GDP per capita G = $28,900

years n = 2051 - 2015 = 35

Output in 2050 of Brazil = G* (1+r)^n = 28900* (1.018)^35 = $53,959.77

Growth rate Venezuela r = 3.6% per year =0.036

GDP per capita G = $12,700

years n = 2051 - 2015 = 35

Output in 2050 of Venezuela = G* (1+r)^n = 12700* (1.036)^35 = $43,792.04

So Brazil will have higher GDP but Venezuela is catching fast.

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