Neco 2019 Economics Question 40

Country X had a real GDP per‑capita of \(\text{₦}15,000\) in 2010. Its average annual real GDP growth rate was 5% and its population grew at 2% per year. The government plans to raise the investment‑to‑GDP ratio from 20% to 25% in 2020, which is expected to increase the annual GDP growth rate by an additional 0.5 percentage points from 2021 onward. Assuming the stated growth rates remain constant, calculate:\n\n(a) The real GDP per‑capita in 2025.\n(b) The cumulative increase in real GDP per‑capita between 2020 and 2025 that is attributable to the higher investment ratio (i.e., the difference between the per‑capita GDP in 2025 under the higher growth path and the per‑capita GDP that would have been obtained if the investment ratio had remained at 20%).