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2 September, 01:55

If a country has 5% real GDP growth and 5% population growth, what is the growth rate of real GDP per capita?

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  1. 2 September, 05:00
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    0%

    Explanation:

    It is easier to explain using an example:

    the country's real GDP during year 1 = $1,000,000

    the country's population during year 1 = 1,000 people

    the real GDP per capita = $1,000,000 / 1,000 people = $1,000 per person

    during year 2, both the real GDP and the population grow by 5%

    the country's real GDP during year 2 = $1,050,000

    the country's population during year 2 = 1,050 people

    the real GDP per capita = $1,050,000 / 1,050 people = $1,000 per person

    so there has been no change in the real GDP per capita.
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