If real GDP rises by 12 percent and population rises by 8 percent then approximately how much does real GDP per capita rise?
Answer and explanation
Correct answer: About 3.7 percent
Per-capita real GDP equals total real GDP divided by population. With a 12% GDP increase and an 8% population increase, the ratio changes by (1.12 ÷ 1.08) − 1 = 0.037037, or about 3.7%. Thus A is correct. Subtracting the rates gives 4%, but that is only an approximation and not the exact ratio; 8% and 20% confuse population or combined growth with per-capita growth.
Frequently asked questions
What is the correct answer to this question?
About 3.7 percent
Why is this the correct answer?
Per-capita real GDP equals total real GDP divided by population. With a 12% GDP increase and an 8% population increase, the ratio changes by (1.12 ÷ 1.08) − 1 = 0.037037, or about 3.7%. Thus A is correct. Subtracting the rates gives 4%, but that is only an approximation and not the exact ratio; 8% and 20% confuse population or combined growth with per-capita 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.
