What happens to per capita GDP if GDP grows more slowly than population?
Answer and explanation
Correct answer: It will fall
Per capita GDP equals total GDP divided by population. If population increases faster than GDP, the denominator grows more rapidly than the numerator, so GDP per person declines. For example, a 4% rise in GDP with a 6% rise in population produces a fall in per capita GDP of approximately 2% before considering compounding. Thus option B is correct.
Frequently asked questions
What is the correct answer to this question?
It will fall
Why is this the correct answer?
Per capita GDP equals total GDP divided by population. If population increases faster than GDP, the denominator grows more rapidly than the numerator, so GDP per person declines. For example, a 4% rise in GDP with a 6% rise in population produces a fall in per capita GDP of approximately 2% before considering compounding. Thus option B is correct.
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.
