GK
INDIAN ECONOMY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The growth rate of Per Capita Income at current prices is higher than that of Per Capita Income at constant prices, because the latter takes into account the rate of:
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growth of population
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increase in price level
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growth in money supply
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increase in the wage rate
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Explanation:
Detailed explanation-1: -Per capita income doesn’t reflect inflation in an economy, which is the rate at which prices rise over time. For example, if the per capita income for a nation rose from $50, 000 per year to $55, 000 the next year, it would register as a 10% increase in annual income for the population.
Detailed explanation-2: -Per capita income is obtained by dividing the total income of the country by the its population. Therefore, if the rate of population growth is higher, per capita income decreases. It increases only when the rate of growth of national income is more than the rate of growth of the population.
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