What is real GDP per capita if a country’s real GDP is $7,878 billion and that country’s population is 896 million?
The correct answer and explanation is:
✅ Correct Answer:
To calculate real GDP per capita, use the formula: Real GDP per capita=Real GDPPopulation\text{Real GDP per capita} = \frac{\text{Real GDP}}{\text{Population}}
Given:
- Real GDP = $7,878 billion = $7,878,000,000,000
- Population = 896 million = 896,000,000
Now calculate: Real GDP per capita=7,878,000,000,000896,000,000=8,795.54\text{Real GDP per capita} = \frac{7,878,000,000,000}{896,000,000} = 8,795.54
✔ Real GDP per capita = $8,795.54
📘 Explanation (300 Words):
Real GDP per capita is a critical economic indicator used to measure the average economic output per person in a country, adjusted for inflation. It provides a clearer picture of a nation’s standard of living than total GDP alone.
To understand its importance, let’s break down the components:
- Real GDP reflects the total value of all final goods and services produced in a country, adjusted for inflation. This ensures that the data accounts for price level changes over time, providing a more accurate picture of economic growth.
- Per capita means “per person.” So when we divide Real GDP by the population, we get an average economic output per person.
In this case:
- The country produces $7,878 billion worth of real goods and services.
- That output is shared among 896 million people.
So, each person in the country, on average, contributes or has access to $8,795.54 worth of real economic output.
This figure is valuable for:
- Comparing countries: A country with a high GDP might not be wealthy if its population is very large. Real GDP per capita adjusts for population size.
- Policy-making: Governments use this metric to assess economic well-being and formulate policies to improve citizens’ quality of life.
- Tracking development: A rising real GDP per capita typically signals improving living standards, whereas a decline could indicate economic problems.
In summary, Real GDP per capita of $8,795.54 tells us that the average individual in the country is associated with this amount of real economic output, providing a measure of national productivity and economic health.