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This question was asked in very popular civil services examination.

Question is : Whether the following statement is correct or not? Statement : If a country is experiencing increase in its per-capita GDP, its GDP must necessarily be growing?

The approach I applied is that, in a country like Syria, if mass emigration happens then population will decrease and at the same time GDP might not decrease with same rate. so this statement will be false.

I know my assumption is not too correct, so ignoring that, please help me arrive in correct answer.

Maverick33
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  • What do you mean your assumption is not correct? – Giskard Jun 06 '17 at 13:56
  • I'm not good in such questions/topics, so I'm just afraid if this is right way to think or not. Moreover I didn't want this particular assumption to prevent better examples coming from more qualified people here. – Maverick33 Jun 06 '17 at 14:01
  • I am not sure I understand what you are asking, but if $G_p = G/(population)$ is the per-capita GDP then $G_p$ increases if the population shrinks or the GDP grows, as you pointed out. So the statement is not correct. – Taufi Jun 06 '17 at 14:33
  • OP, your logic is correct, The statement is false, because the increase in GDP per capita could be due to a population decrease. – BB King Jun 06 '17 at 14:34
  • Thank you @Taufi and BB King . I was not sure if this can practically happen, so was wondering.

    Though, I'd love to know if this situation is possible in real life?

     – Maverick33 Jun 06 '17 at 14:38
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    Possible duplicate of Calculating rate of growth of per capita income – luchonacho Jun 06 '17 at 15:59

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Your reasoning seems correct.

if we consider that Gp=G/(population) and we know that Gp is increasing then we have the following possibilities:

  • if (population) is static or growing then we can conclude that G must necessarily be growing
  • if (population) is decreasing then G can be either static or actually decreasing slower than (population). In this case, the statement on the question fails
Lucas Oliveira
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