The following table provides approximate statistics on per capita income levels and growth rates for regions defined by income levels. According to the Rule of 70, starting in 2018 the high-income countries are projected to double their per capita GDP in approximately 70 years, in 2088. Throughout this question, assume constant growth rates for each of the regions are equal to their average value between 2000 and 2018. 

a. Calculate the ratio of per capita GDP in 2018 of the following:

i. Middle-income to high-income countries 

ii. Low-income to high-income countries 

iii. Low-income to middle-income countries

b. Calculate the number of years it will take the lowincome and middle-income countries to double their per capita GDP.

c. Calculate the per capita GDP of each of the regions in 2088.

d. Repeat part a with the projected per capita GDP in 2088.

e. Compare your answers to parts a and d. Comment on the change in economic inequality between the regions.  

Transcribed Image Text:

Region High- income countries Middle- income countries Low-income countries Real GDP per capita (2018) $43,559 Data from: World Bank. 5,149 740 Average annual growth rate of real GDP per capita (2000-2018) 1.0% 3.6 2.1