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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Why might per-capita real economic growth be a more useful measurement than absolute real economic growth?

To determine

Comparing per capita real economic growth and absolute real economic growth.

Explanation

The per capita real economic growth is accounted by dividing the real gross domestic product (GDP) with total population. Growth of an economy measures the changes in GDP from one year to another year in per capita GDP and measure standard of living of the people. The absolute real economic growth measures the percentage change in real GDP from one year to another. However, improvement in standard of living cannot be measured properly. It is because absolute real per capita measures the value of output without considering the population.

Thus, the per capita real economic growth is more efficient measure than absolute real economic growth in terms of measuring the standard of living.

Concept

Per capita real economic growth: Per capita real economic growth is accounted by dividing the real gross domestic product (GDP) with total population.

 Absolute real per capita: Absolute real per capita is a macroeconomic measure of the value of economic output adjusted for price changes.

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