Assume the total real income of a developing country increases from $8.5 billion to $8.5 billion, while its population expands from 14 to 15 million people from one year to the next. Over the year, per capita income has

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The total real income remains the same at $8.5 billion, but the population increases from 14 million to 15 million. The per capita income decreases because the same amount of income is now distributed among more people. The decrease is calculated as ($8.5 billion / 15 million) - ($8.5 billion / 14 million), which is approximately a decrease of $5 per person.

Assume the Total Real Income of a Developing Country Increases