Multiple Choice
Why do gross domestic product (GDP) calculations count only final goods and services?
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10. Measuring National Output and Income
Expenditure Approach for Measuring GDP
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If Country A has a total GDP of 500 billion dollars and a population of 25 million people, what is the GDP per person (per capita) for Country A?
A
20,000 dollars
B
12,500 dollars
C
25,000 dollars
D
2,000 dollars
Verified step by step guidance1
Identify the formula for GDP per capita, which is the total GDP divided by the total population. Mathematically, this is expressed as: \(GDP\ per\ capita = \frac{Total\ GDP}{Population}\).
Substitute the given values into the formula. Here, the total GDP is 500 billion dollars, and the population is 25 million people. So, write: \(GDP\ per\ capita = \frac{500\ billion}{25\ million}\).
Convert the units to the same base to simplify the division. For example, express 500 billion as 500,000 million to match the population unit in millions.
Perform the division of the total GDP (in millions) by the population (in millions) to find the GDP per capita.
Interpret the result as the average economic output per person in Country A, which helps compare living standards or economic productivity across countries.
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