IAI Actuarial Core Principles · Business Economics · Business activity, unemployment and inflation
Real GDP of an economy rose from Rs 80 lakh crore to Rs 84.8 lakh crore in one year, while population grew by 1%. Approximately what was the growth rate of real GDP per head?
Real GDP per head grew by about 5%. Real GDP grew 6% (4.8 on 80), and population growth of 1% must be deducted because the same output is shared among more people, giving 1.06/1.01 - 1, or roughly 4.95%.
- A7.0%
- B6.0%
- C5.0%Correct
- D4.0%
- 8.0%
Explanation
GDP growth = 4.8/80 = 6%. Per capita growth = 1.06/1.01 - 1 = 4.95%, about 5%. Answering 6% ignores population growth, while 7% adds the population growth instead of subtracting it.
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