Practice Quiz

Praxis II Social Sciences Content Knowledge Exam Prep

Category - Macroeconomics

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What affect would a rapid population increase have upon the real GDP and the per capita GDP?
  1. It would increase real GDP and have no effect upon per capita GDP
  2. It would decrease real GDP and increase per capita GDP
  3. It would increase real GDP and decrease per capita GDP
  4. It would lead to no change in either real GDP nor per capita GDP
Explanation
Answer - C - A rapid population increase would lead to an increase in real GDP and a decrease in per capita GDP.

Key Takeaway: Population growth is always one of the key items that leads to an increase in real GDP (basic economic growth). Such an increase in population will eventually increase the labor force, resulting in the increase in GDP. But remember that per capita GDP is GDP divided by the population. So as the population gets larger, the per capita GDP falls.
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