If our GDP rises by 50 percent,our GDP deflator doubles,and our population stays the same,our real per capita GDP will

Question

Quizplus · Accepted Answer

Real per capita GDP is calculated by dividing the real GDP by the population. Since population is constant, real per capita GDP will only be affected by changes in real GDP. If real GDP doubles, but the GDP deflator also doubles, this means that the increase in nominal GDP is purely due to inflation. Therefore, real GDP has not actually increased, and neither has real per capita GDP. In fact, real per capita GDP has decreased by 25 percent because the same amount of real GDP is now being spread across a larger nominal GDP due to inflation.

If Our GDP Rises by 50 Percent,our GDP Deflator Doubles,and