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If real GDP rises by 12 percent and population rises by 8 percent then approximately how much does real GDP per capita rise?

Answer and explanation

Correct answer: About 3.7 percent

Per-capita real GDP equals total real GDP divided by population. With a 12% GDP increase and an 8% population increase, the ratio changes by (1.12 ÷ 1.08) − 1 = 0.037037, or about 3.7%. Thus A is correct. Subtracting the rates gives 4%, but that is only an approximation and not the exact ratio; 8% and 20% confuse population or combined growth with per-capita growth.

Related tags

Per Capita GdpPopulation GrowthReal GdpGrowth RatesGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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