"Assume that a “leader country” has real GDP per capita of $50,000, whereas a “follower country” has real GDP per capita of $25,000. Next suppose that the growth of real GDP per capita falls to zero percent in the leader country and rises to 2 percent in the follower country.

Instructions: Enter your answer as a whole number.

If these rates continue for long periods of time, how many years will it take for the follower country to catch up to the living standard of the leader country? _?__ years."

I don't know the equation to figure this out, and it's not 50 years because each year it's growing and 2% of the "follower country's" real GDP will increase each year. So you can't just add 500 (which is 2% of 25,000) each time, because the next year 2% of 25,500 is 510 and so on.

Do you have a graphing calculator? Plug it into the time value program on there and solve for time.

35 years

Here's a good link with the formula:

http://www.financeformulas.net/Solve-for-Number-of-Periods-PV-and-FV.html#Calc-Header

This post was edited by 1messdkid on Mar 21 2015 08:56pm

Awesome, thank you!!