GDP per capita is calculated by dividing a country's gross domestic product by which measure?

GDP per capita is calculated by dividing a country's gross domestic product by which measure?

• A. Population
• B. Gross domestic product
• C. Net national income
• D. Disposable personal income

Answer: (A)

GDP per capita shows the average economic output per person. It is found by taking the total value of goods and services produced inside a country (GDP) and dividing it by the number of people in the country (population). This division distributes the overall economic activity across individuals, making it possible to compare living standards between countries of different sizes. The idea is that population is the right measure to use as the divisor because it represents how many people share the economy’s output. Other measures, like net national income or disposable personal income, capture different kinds of income or take-home pay and do not reflect total domestic production per person, so they aren’t used to compute GDP per capita.

GDP per capita shows the average economic output per person. It is found by taking the total value of goods and services produced inside a country (GDP) and dividing it by the number of people in the country (population). This division distributes the overall economic activity across individuals, making it possible to compare living standards between countries of different sizes. The idea is that population is the right measure to use as the divisor because it represents how many people share the economy’s output. Other measures, like net national income or disposable personal income, capture different kinds of income or take-home pay and do not reflect total domestic production per person, so they aren’t used to compute GDP per capita.