Question

Suppose that real GDP increases by 5 percent while the population of a country increases by 7 percent. In this situation:

a) Real GDP per capita increases
b) Real GDP per capita decreases
c) Real GDP remains unchanged
d) Real GDP is no longer relevant

Answer 1

The correct answer is a) Real GDP per capita increases.

Step-by-step explanation:

The correct answer is a) Real GDP per capita increases.

When real GDP increases by 5 percent and the population increases by 7 percent, it means that the GDP is growing at a slower rate compared to the population growth. As a result, the real GDP per capita increases because the GDP is spreading across a larger population. Even though the overall GDP is increasing, it is not keeping up with the population growth, leading to a higher GDP per person.