GDP per capita is GDP divided by what?

GDP per capita is GDP divided by what?

• A. Labor force
• B. Total employment
• C. Population
• D. Number of households

Answer: (C)

GDP per capita shows how much economic output is available, on average, for each person in the country. It is calculated by dividing the total GDP by the number of people in the population, which makes the size of the economy comparable across countries with different population sizes. Dividing by the labor force would measure output per active worker, ignoring those not seeking work. Dividing by total employment would exclude the unemployed and those not employed, giving a distorted picture. Dividing by the number of households would mix in household sizes and isn’t a direct measure of per-person output. So the correct denominator is the population.

GDP per capita shows how much economic output is available, on average, for each person in the country. It is calculated by dividing the total GDP by the number of people in the population, which makes the size of the economy comparable across countries with different population sizes. Dividing by the labor force would measure output per active worker, ignoring those not seeking work. Dividing by total employment would exclude the unemployed and those not employed, giving a distorted picture. Dividing by the number of households would mix in household sizes and isn’t a direct measure of per-person output. So the correct denominator is the population.