This formula makes it clear that real GDP per person grows only if real GDP grows faster than the population grows. Growth of real GDP per person = 5 percent − 1 percent = 4 percent. If the growth rate of the population exceeds the growth of real GDP, real GDP per person falls.
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25.1 The Basics of Economic Growth (2 of 9)
To calculate this growth rate, we use the formula:
25.1 The Basics of Economic Growth (6 of 9)
The growth rate of real GDP per person can also be calculated by using the formula:
Growth of real GDP per person = Growth rate of real GDP − Growth rate of population
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25. Economic Growth
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