Using exact calculation if real GDP rises by eight percent and population by four percent what is the approximate real per capita growth?
Answer and explanation
Correct answer: Three point eight five percent
Exact per-capita growth is calculated by dividing the output growth factor by the population growth factor and subtracting one: (1.08 ÷ 1.04 − 1) × 100. The result is approximately 3.846%, or 3.85%. Therefore option B is correct. Four percent is only the small-rate subtraction approximation; twelve percent adds the rates, and two percent does not follow from the given factors.
Frequently asked questions
What is the correct answer to this question?
Three point eight five percent
Why is this the correct answer?
Exact per-capita growth is calculated by dividing the output growth factor by the population growth factor and subtracting one: (1.08 ÷ 1.04 − 1) × 100. The result is approximately 3.846%, or 3.85%. Therefore option B is correct. Four percent is only the small-rate subtraction approximation; twelve percent adds the rates, and two percent does not follow from the given factors.
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.
