If a country has a population of 1,000 people and a GDP of $5 million, what is its GDP per capita?

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Prepare for the Rutgers Macroeconomics Test with multiple choice questions, hints, and explanations. Master key concepts and excel in your exam!

Multiple Choice

If a country has a population of 1,000 people and a GDP of $5 million, what is its GDP per capita?

Explanation:
GDP per capita is found by dividing a country’s GDP by its population. This gives the average economic output (or income) per person. Compute: 5,000,000 dollars divided by 1,000 people equals 5,000 dollars per person. So, on average, each person would contribute or receive about $5,000 in economic activity. Why the other numbers don’t fit: 500 would require a GDP of 500 times 1,000 people, which is 500,000 dollars—far from 5 million. 50,000 would imply a GDP of 50,000 times 1,000 people, or 50,000,000 dollars. 5,000,000 would imply per-person output of 5,000,000 dollars, which would scale up the population accordingly. The calculation with the given GDP and population gives 5,000 dollars per person.

GDP per capita is found by dividing a country’s GDP by its population. This gives the average economic output (or income) per person.

Compute: 5,000,000 dollars divided by 1,000 people equals 5,000 dollars per person. So, on average, each person would contribute or receive about $5,000 in economic activity.

Why the other numbers don’t fit: 500 would require a GDP of 500 times 1,000 people, which is 500,000 dollars—far from 5 million. 50,000 would imply a GDP of 50,000 times 1,000 people, or 50,000,000 dollars. 5,000,000 would imply per-person output of 5,000,000 dollars, which would scale up the population accordingly. The calculation with the given GDP and population gives 5,000 dollars per person.

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