What is the annual rate of growth of per capita real GDP if real GDP grows at a constant rate of 5 percent per year and the annual rate of population growth is 3 percent?

Question

Quizplus · Accepted Answer

The annual rate of growth of per capita real GDP can be calculated as:

Growth rate of per capita real GDP = Growth rate of real GDP - Growth rate of population

Given that real GDP grows at a constant rate of 5 percent per year and the annual rate of population growth is 3 percent, the growth rate of per capita real GDP can be calculated as:

Growth rate of per capita real GDP = 5% - 3%
Growth rate of per capita real GDP = 2%

Therefore, the annual rate of growth of per capita real GDP is 2 percent per year.

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