Assume that the real output of a developing nation increases from $120 billion to $140 billion, while its population expands from 100 to 110 million. As a result, real income per capita has increased by
About
A) $56 per person.
B) $64 per person.
C) $72 per person.
D) $88 per person.

Question

Quizplus · Accepted Answer

Real income per capita is equal to real output divided by population.

Initially, real income per capita was $120 billion / 100 million people = $1,200 per person.

After the increase in real output and population, real income per capita is $140 billion / 110 million people = $1,272.73 per person.

The increase is $1,272.73 - $1,200 = $72.73 per person. Therefore, the best choice is C, $72 per person.

Assume That the Real Output of a Developing Nation Increases