ECONOMICS
GDP
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
consumption spending must increase.
|
|
|
real GDP must increase more rapidly than population.
|
|
|
population must increase more rapidly than real GDP.
|
|
|
investment spending must increase.
|
Detailed explanation-1: -Real GDP per capita is usually lower than the growth of real GDP because the population is typically increasing in a country, so if GDP increases 3 percent, but the population is also increasing, GDP per capita will increase less than 3 percent (or even decline if the population increased at a faster pace than GDP).
Detailed explanation-2: -Broadly speaking, there are two main sources of economic growth: growth in the size of the workforce and growth in the productivity (output per hour worked) of that workforce. Either can increase the overall size of the economy but only strong productivity growth can increase per capita GDP and income.
Detailed explanation-3: -To be sure, a larger population almost always results in a larger aggregate economy. More workers, more consumers, and more government spending will make for a larger GDP. But the standard of living in a country is determined by per capita (i.e., per person) GDP, not the overall size of the economy.
Detailed explanation-4: -If the growth in population exceeds the growth in real GDP, real GDP per capita will fall.