Question

Suppose the population of country ABC rises from 40 million to 44 million. If the country's Real GDP rises from $825 billion to $890 billion during this same period, the result is _________________ economic growth.

A. per-capita real economic growth, but not absolute
B. both absolute economic growth and per-capita real
C. absolute economic growth, but not per-capita real
D. neither absolute economic growth nor per-capita real

Answer 1

Answer:

Option (C) is correct.

Explanation:

Given that,

Population rises from 40 million to 44 million

Country's Real GDP rises from $825 billion to $890 billion during this same period.

Therefore,

This country experiencing a absolute economic growth because of the rise in real GDP.

Initial per capita growth:

= Initial Real GDP ÷ Initial Population

= $825 ÷ 40 million

= $20.625

New per capita growth:

= Increased Real GDP ÷ New Population

= $890 ÷ 44 million

= $20.227

Above calculations clearly shows that there is a decline in the per capita growth.

Hence, there is an absolute economic growth but not per-capita real.