Answer to Question #50036 in Macroeconomics for julianne

Question

Assume that a "leader country" has a real GDP per capita of $40,000, whereas a "follower country" has real GDP per capita of $20,000. Next suppose that the growth of real GDP per capita falls to zero percent in the leader country and rises to 7 percent in the follower country. 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.

Answer 1

"Leader" real GDP per capita = $40,000, "follower" real GDP per capita = $20,000. If the growth of real GDP per capita falls to zero percent in the leader country and rises to 7 percent in the follower country, it will take for the follower country to catch up to the living standard of the leader country t years.
20,000*1.07^t = 40,000
t = log1.07(2) = 10.2 years.