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Question
Over the past decade, a nationʹs 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 6 percent annually. If the forecasters are correct, which of the following will be true?
A) The annual rate of growth of per capita real GDP will decline from 4 percent to 2 percent.
B) The annual rate of growth of per capita real GDP will decline from 2 percent to 1 percent.
C) The annual rate of growth of per capita real GDP will increase from 2 percent to 4 percent.
D) The annual rate of growth of per capita real GDP will increase from 2 percent to 6 percent.
Answer
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