ECON MACRO 5th Edition by William McEachern

Exercise 1

Besides income, identify ways that low-income economies differ from high-income economies
(Worlds Apart) Per capita income most recently was about 160 times greater in the United States than in the Democratic Republic of the Congo. Suppose per capita income grows an average of 3 percent per year in the richer country and 6 percent per year in the poorer country. Assuming such growth rates continue indefinitely into the future, how many years would it take before per capita income in the Congo exceeds that of the United States? (To simplify the math, suppose at the outset per capita income is $160,000 in the richer country and $1,000 in the poorer country.)