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Why do economists use real GDP per capita when analyzing economic growth? (200 Words)

Why do economists use real GDP per capita when analyzing economic growth? (200 Words)

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Answer #1

RGDP per capita = RGDP/ Total population

RGDP per capita shows the value of RGDP per person in a country.

Economist use RGDP because it is the adjusted GDP by considering the inflation and price level. Real GDP tells what is the real GDP in the country. Real GDP per capita tells the GDP per person in the country which tells us the average revenue per person in the country. If RGDP per capita is increasing every year it means that the average revenue per person is increasing in the country which means that country is performing better and the standard of living of the people in the country is also increasing. If the standard of living of people in the country is improving which means the poverty level is going down, unemployment rate is decreasing and the production is increasing which means industries are performing good.

Thus Economists use RGDP per capita to analyze economic growth.

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