Question

if an economy can increase its steady annual growth rate from 1 percent to 1.5 percent, this reduces the time it takes for the economy to double in size by approximately ______ years.

17
8
5
23

Explanation:

Calculate doubling time at 1 percent growth rate

$$ T_1 \approx \frac{70}{1} = 70 \text{ years} $$

Calculate doubling time at 1.5 percent growth rate

$$ T_2 \approx \frac{70}{1.5} \approx 46.67 \text{ years} $$

Calculate the reduction in doubling time

$$ \Delta T = T_1 - T_2 \approx 70 - 46.67 = 23.33 \approx 23 \text{ years} $$

Answer:

• 17
• 8
• 5
• 23 (Correct answer)