Question 15.22

8. Over the next 100 years, real GDP per capita in Groland is expected to grow at an average annual rate of 2.0%. In Sloland, however, growth is expected to be somewhat slower, at an average annual growth rate of 1.5%. If both countries have a real GDP per capita today of $20,000, how will their real GDP per capita differ in 100 years? [Hint: A country that has a real GDP today of $x and grows at y% per year will achieve a real GDP of $x × (1 + (y/100))z in z years. We assume that 0 ≤ y < 10.]