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If real GDP rises from two hundred billion to two hundred ten billion while population rises from one hundred million to one hundred ten million, what happens to real output per capita?

Answer and explanation

Correct answer: It will fall because population growth exceeds output growth

Real output per capita equals real GDP divided by population. Initially it is 200 billion divided by 100 million, or 2,000 units per person. Finally it is 210 billion divided by 110 million, about 1,909 units per person. Although total real GDP rises by 5%, population rises by 10%, so output per person falls. Hence option B is correct.

Related tags

GdpWelfarePer-Capita-OutputPopulationGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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