If a country's total GDP rises by ten percent and population rises by twelve percent what is the appropriate conclusion about per capita output?
Answer and explanation
Correct answer: Per capita output is likely to fall
The governing concept is per capita output, calculated as total GDP divided by population. If GDP rises by 10% while population rises by 12%, the denominator grows faster than the numerator. Using the growth ratio, per capita output becomes approximately 1.10 divided by 1.12, or 0.982 of its former level, a small decline of about 1.8%. Therefore, option B is correct; the other choices contradict this comparison.
Frequently asked questions
What is the correct answer to this question?
Per capita output is likely to fall
Why is this the correct answer?
The governing concept is per capita output, calculated as total GDP divided by population. If GDP rises by 10% while population rises by 12%, the denominator grows faster than the numerator. Using the growth ratio, per capita output becomes approximately 1.10 divided by 1.12, or 0.982 of its former level, a small decline of about 1.8%. Therefore, option B is correct; the other choices contradict this comparison.
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.
