Question:
What is the best use of the rule of 70 among those listed below?
A. to calculate the differences between the growth rate in real GDP and the growth rate in real GDP per capita
B. to judge how rapidly real GDP per capita is growing over long time periods
C. to forecast the duration of recessions
D. to find the average annual growth rate of real GDP
Rule of 70
The rule of 70 is used to determine investment values. It is the calculation used to measure the amount of time it will take for one's investment to double based on a given rate of return.
Answer and Explanation:
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The answer is B. to judge how rapidly real GDP per capita is growing over long time periods
The rule of 70 is used to judge growth rate. GDP is used...
See full answer below.
to measure economic growth and an economy's ability to double its GDP. The growth rate is determined by dividing 70 by the rate of growth, which determines how long GDP will take to double.
Other Options
A. to calculate the differences between the growth rate in real GDP and the growth rate in real GDP per capita
The rule of 70 is a measure of growth, not variance between two variables.
C. to forecast the duration of recessions
Forecasting the duration of recessions requires more than the rate of growth as a variable. Recessions are the result of several variables.
D. to find the average annual growth rate of real GDP
The best way to find this data is by adding the total growth and multiplying it by the number of years.
