ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Real GDP is falling.
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Incomes are growing at a slower rate than the population.
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Real GDP per capita is rising.
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Living standards are falling.
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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: -Economic growth refers to an increase in the size of a country’s economy over a period of time. The size of an economy is typically measured by the total production of goods and services in the economy, which is called gross domestic product (GDP). Economic growth can be measured in ‘nominal’ or ‘real’ terms.
Detailed explanation-3: -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-4: -Annual growth rate of real Gross Domestic Product (GDP) per capita is calculated as the percentage change in the real GDP per capita between two consecutive years. Real GDP per capita is calculated by dividing GDP at constant prices by the population of a country or area.