If output per capita grows by a constant 6% per year, then the standard of living would grow by about over 3 years.
A) 15%
B) 20%
C) 12%
D) 23%
E) 19%

Question

Quizplus · Accepted Answer

The standard of living, as measured by output per capita, growing at a constant 6% per year over 3 years, can be calculated using the formula for compound growth: $FV = PV(1 + r)^n$, where FV is the future value, PV is the present value (which can be taken as 100 for simplicity), r is the growth rate (0.06 for 6%), and n is the number of years (3). Plugging in the numbers: $100(1 + 0.06)^3 = 119.1016$. This means the output per capita grows to approximately 119.1016 from 100, which is an increase of about 19%.

If Output Per Capita Grows by a Constant 6% Per