2.1

Gedankenexperiment: inequality gets worse before it gets better (1 point)

In a rich country A, the gross domestic product per capita is r = 53,000 (US dollars). In a poor country B, the

GDP per capita is p = 7,000. Suppose the GDP of country A grows by 5% per year, and that an economic

miracle in country B begins to propel a growth of 9% per year. Assume these growth rates are constant.

- For how many years does the absolute difference in GDP between rich country A and poor country B grow?

- How many years does it take for the GDP of country B to exceed that of country A?

(Justify your answers.)