Question

According to the rule of 72, if the GDP of the Apex Federation is growing at 1.7% per year, its economy will double in approximately how many years?
A. 41 years
B. 17 years
C. 42 years
D. 114 years

Answer 1

Answer:

C. 42 years

Explanation:

Rule 72 is used in finance and economics to estimate the number of years it will take for a given capital value to be doubled, given a given annual interest rate. In the case of GDP, the interest rate is replaced by the growth rate of the economy.

The formula for this rule consists of dividing 72 by the growth rate of the economy. The result will be the number of years for the capital value to double.

72 / growth rate = years to double

If the GDP growth rate is 1.7%, we have:

72 / 1.7 = 42.3 years