For an industrialized country experiencing a 3% growth rate in real GDP, what is the most likely reason that real GDP per capita is decreasing?
A) The country's population is growing faster than the growth of real GDP.
B) The country's government is hoarding large amounts of the country's production.
C) The country's population is growing slower than the growth of nominal GDP.
D) The country's nominal GDP is growing slower than its real GDP.

Question

Quizplus · Accepted Answer

Real GDP per capita can only decrease if the population is growing faster than the real GDP. This means that while the country's total GDP is increasing by 3%, the population is growing at a faster rate, resulting in a lower GDP per person.  Hoarding of production, slower population growth than nominal GDP, or slower nominal GDP growth than real GDP growth would all likely result in an increase in real GDP per capita.

For an Industrialized Country Experiencing a 3% Growth Rate in Real