Suppose real GDPs in Hauck and Meran are identical at $10 trillion in 2000. Suppose Hauck's economic growth rate is 2% and Meran's is 4% and the rates remain constant over time. Calculate the percentage difference in their levels of potential output in 2036.
A. There will be no difference in their levels of potential output.
B. Meran's potential output will be 50% higher than that of Hauck's.
C. Hauck's potential output will be 100% higher than that of Meran's.
D. Meran's potential output will be 100% higher than that of Hauck's.
Ans: D. Meran's potential output will be 100% higher than that of Hauck's.
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