What is the Rule of 70?

The Rule of 70

Here is the formula

                                  Source: Ideas Make Market

• Say the current real GDP per capita in Econland is $40,000. 
• We know that real GDP per capita for Econland grows at an annual rate of 5%. Notice we need an annual rate for our calculations.  
• Know let's figure out how long would it take for real GDP per capita to double.

• One thing to note is we don't convert the percentage into a decimal. 
• This will give you a crazy big number, so that is how you know you preformed the calculation incorrectly.

• This calculation of growth is important because it's the best measurement of an economy's ability to produce, and therefore gives us an indication on the health of the economy in the long term.