Question

The following table depicts statistics on GDP per capita (ie, GDP/population) in column (1) and its growth rate for the country groups (column 2) defined by GDP levels (High-income, Middle-income and Low-income). They are all expressed as real (constant) GDP.

	(1)	(2)	(3)
Country group	GDP per capita (Year 2010)	Average annual growth rate of real GDP per capita (Year 2000-2010)	GDP per capita (Year 2088)
High-income	38,293	0.9%	?
Middle-income	3,980	4.8%	?
Low-income	507	3.0%	?

Source: The World Bank,

http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators

Throughout this question, assume constant growth rates for each of the country groups that are equal to their average value between year 2000 and 2010 (column 2 of Table). Answer the following questions (show all the calculation steps to get the partial marks):

Compute the ratio of GDP per capita of the different income groups in year 2010 (expressed in the one decimal point in %): (1.5 mark, 0.5 each)

Middle- to High-income group

Low- to High-income group

Low- to Middle income group

Compute the approximate number of years it will take the Low-income and Middle-income countries to double their GDP per capita. (1 mark)

Approximate the GDP per capita for High-income, Middle-income and Low-income groups for the year 2088, and fill in column 3 of the Table. (1.5 mark, 0.5 each)

Repeat part a) of the question with the computed GDP per capita in year 2088 (1.5 mark, 0.5 each)

Now compare your answers in part a) and part d). Comment on any changes occurred between year 2010 and 2088. (2 mark)

Answer 1