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If one country has per capita income of $15, 000 and its economic growth rate is 5 percent per year, what will its per capita income be in 10 years? About how many years will it take to catch up to a country where the per capita income is $30, 000 per year and the economic growth rate is 1 percent per year?
(Hint: Using annual compounding, future value = present value ∗ (1 + rt), where r is the growth rate, t is the number of periods.)
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