Suppose real GDP in a country called Gambria is increasing by 5% annually and the population of Gambria is increasing by 2% annually. Then, :
A) Gambria's population must be declining.
B) Gambria will have to export more than it imports.
C) the general level of prices in Gambria must be increasing.
D) Gambria's per capita real GDP will be increasing.

Question

Quizplus · Accepted Answer

Since the real GDP is increasing more than the population, it means that the overall economy is growing. This also implies that the per capita real GDP is increasing, even though the population is also increasing. This is because the real GDP is growing at a faster rate than the population, resulting in an increase in each person's share of the economy.

Suppose Real GDP in a Country Called Gambria Is Increasing