If GDP rises but population grows faster than GDP, what will happen to per capita GDP?
Answer and explanation
Correct answer: Per capita GDP may fall
Per capita GDP is calculated by dividing total GDP by the population. If GDP increases by a smaller percentage than population, the denominator grows faster than the numerator, so GDP per person decreases. For example, a 5% rise in GDP combined with an 8% rise in population lowers per capita GDP, even though total GDP has increased.
Frequently asked questions
What is the correct answer to this question?
Per capita GDP may fall
Why is this the correct answer?
Per capita GDP is calculated by dividing total GDP by the population. If GDP increases by a smaller percentage than population, the denominator grows faster than the numerator, so GDP per person decreases. For example, a 5% rise in GDP combined with an 8% rise in population lowers per capita GDP, even though total GDP has increased.
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.
