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Using exact calculation if real GDP rises by eight percent and population by four percent what is the approximate real per capita growth?

Answer and explanation

Correct answer: Three point eight five percent

Exact per-capita growth is calculated by dividing the output growth factor by the population growth factor and subtracting one: (1.08 ÷ 1.04 − 1) × 100. The result is approximately 3.846%, or 3.85%. Therefore option B is correct. Four percent is only the small-rate subtraction approximation; twelve percent adds the rates, and two percent does not follow from the given factors.

Related tags

Real-GdpExact-GrowthPer-CapitaNumericalGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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