Over the past decade, a nation's real Gross Domestic Product (GDP) grew at a constant rate of 10 percent per year while its population grew 8 percent annually. Forecasters predict that during the coming decade, real GDP will continue to grow 10 percent annually, but the population growth rate is expected to drop to 7 percent annually. If the forecasters are correct, which of the following will be TRUE?

Question

Quizplus · Accepted Answer

The growth rate of per capita real GDP is calculated by subtracting the population growth rate from the real GDP growth rate. In the past decade, this was 10% - 8% = 2%. In the coming decade, it will be 10% - 7% = 3%. Therefore, the growth rate of per capita real GDP will increase from 2% to 3%.

Over the Past Decade, a Nation's Real Gross Domestic Product