Under which condition will real GDP per capita increase?
Answer and explanation
Correct answer: Real GDP growth exceeds population growth
Real GDP per capita equals real GDP divided by population. Its growth is approximately the growth rate of real GDP minus the growth rate of population. Therefore, when real output grows faster than the number of people, output available per person increases. If population grows faster, the ratio falls; a higher price level alone changes nominal values, not real GDP per capita.
Frequently asked questions
What is the correct answer to this question?
Real GDP growth exceeds population growth
Why is this the correct answer?
Real GDP per capita equals real GDP divided by population. Its growth is approximately the growth rate of real GDP minus the growth rate of population. Therefore, when real output grows faster than the number of people, output available per person increases. If population grows faster, the ratio falls; a higher price level alone changes nominal values, not real GDP per capita.
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.
