Econ 4th Edition by William McEachern

Exercise 1

WORLDS APART Per capita income most recently was 160 times greater in the United States than in the Congo. Suppose income per capita grows an average of 3 percent per year in the United States and 6 percent per year in the Congo. 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.)