If real GDP rises but real GDP per capita falls, which conclusion is most appropriate?
Answer and explanation
Correct answer: Population growth exceeds real GDP growth
Real GDP per capita equals real GDP divided by population. If total real GDP increases but the per-person figure decreases, population must have increased faster than real output over the relevant period. This conclusion does not require any assumption about the price level because real GDP already removes price effects. The result also says nothing definite about equality or total welfare, so A is the only valid answer.
Frequently asked questions
What is the correct answer to this question?
Population growth exceeds real GDP growth
Why is this the correct answer?
Real GDP per capita equals real GDP divided by population. If total real GDP increases but the per-person figure decreases, population must have increased faster than real output over the relevant period. This conclusion does not require any assumption about the price level because real GDP already removes price effects. The result also says nothing definite about equality or total welfare, so A is the only valid answer.
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.
