A country's real GDP grows by 4% while its population grows by 6%. What is the likely effect on output per person?
Answer and explanation
Correct answer: About a 2% decrease
Output per person is calculated as real GDP divided by population. With the approximate growth rule, per-capita growth is 4% − 6% = −2%, so real output per person falls by about 2%; option C is correct. The exact ratio is 1.04/1.06 − 1, approximately −1.9%, which leads to the same conclusion. A reverses the difference, B adds the rates, and D ignores population growth.
Frequently asked questions
What is the correct answer to this question?
About a 2% decrease
Why is this the correct answer?
Output per person is calculated as real GDP divided by population. With the approximate growth rule, per-capita growth is 4% − 6% = −2%, so real output per person falls by about 2%; option C is correct. The exact ratio is 1.04/1.06 − 1, approximately −1.9%, which leads to the same conclusion. A reverses the difference, B adds the rates, and D ignores population growth.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
