If total GDP rises but per capita GDP falls, what is the most likely reason?
Answer and explanation
Correct answer: Population grew faster than GDP
Per capita GDP is calculated as total GDP divided by population. It can fall when the percentage growth of population is greater than the percentage growth of total GDP. For example, if GDP rises by 3% but population rises by 5%, output per person tends to decline. Thus option B is correct; the other choices do not explain this arithmetic relationship.
Frequently asked questions
What is the correct answer to this question?
Population grew faster than GDP
Why is this the correct answer?
Per capita GDP is calculated as total GDP divided by population. It can fall when the percentage growth of population is greater than the percentage growth of total GDP. For example, if GDP rises by 3% but population rises by 5%, output per person tends to decline. Thus option B is correct; the other choices do not explain this arithmetic relationship.
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.
