What happens to per capita GDP if GDP remains constant and population increases?
Answer and explanation
Correct answer: It will fall
Per capita GDP is calculated as total GDP divided by population: per capita GDP = GDP ÷ population. If GDP stays constant while the denominator, population, increases, the quotient must decrease. For example, a fixed output of 100 divided among 10 people gives 10 per person, but among 20 people it gives 5. Hence 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 is calculated as total GDP divided by population: per capita GDP = GDP ÷ population. If GDP stays constant while the denominator, population, increases, the quotient must decrease. For example, a fixed output of 100 divided among 10 people gives 10 per person, but among 20 people it gives 5. Hence 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.
