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One country's GDP is currently $600 billion and is growing at 10% per annum. Another country's GDP is $700 billion, while it is growing at 5% per annum. How many years will it take for the GDP of the 1st country to overtake the 2nd?

Solution

✅ Correct Option: 2

Country 1: Current GDP = $600 billion, Growth rate = 10% per year

Country 2: Current GDP = $700 billion, Growth rate = 5% per year


Country 1's GDP after tt years: 600×(1.10)t600 \times (1.10)^t

Country 2's GDP after tt years: 700×(1.05)t700 \times (1.05)^t


To find when Country 1 overtakes Country 2:

600×(1.10)t>700×(1.05)t600 \times (1.10)^t > 700 \times (1.05)^t


After 3 years:

Country 1: 600×(1.10)3600 \times (1.10)^3

=600×1.331= 600 \times 1.331

=798.6= 798.6 billion

Country 2: 700×(1.05)3700 \times (1.05)^3

=700×1.158= 700 \times 1.158

=810.6= 810.6 billion

Country 2 is still ahead.


After 4 years:

Country 1: 600×(1.10)4600 \times (1.10)^4

=600×1.464= 600 \times 1.464

=878.4= 878.4 billion

Country 2: 700×(1.05)4700 \times (1.05)^4

=700×1.216= 700 \times 1.216

=851.2= 851.2 billion

Country 1 has overtaken Country 2.


Therefore, it will take 4 years for the GDP of the 1st country to overtake the 2nd.

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