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This question was asked in very popular civil services examination.

Question is : Whether the following statement is correct or not? Statement : If a country is experiencing increase in its per-capita GDP, its GDP must necessarily be growing?

The approach I applied is that, in a country like Syria, if mass emigration happens then population will decrease and at the same time GDP might not decrease with same rate. so this statement will be false.

I know my assumption is not too correct, so ignoring that, please help me arrive in correct answer.

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  • $\begingroup$ What do you mean your assumption is not correct? $\endgroup$ – Giskard Jun 6 '17 at 13:56
  • $\begingroup$ I'm not good in such questions/topics, so I'm just afraid if this is right way to think or not. Moreover I didn't want this particular assumption to prevent better examples coming from more qualified people here. $\endgroup$ – Maverick33 Jun 6 '17 at 14:01
  • $\begingroup$ I am not sure I understand what you are asking, but if $G_p = G/(population)$ is the per-capita GDP then $G_p$ increases if the population shrinks or the GDP grows, as you pointed out. So the statement is not correct. $\endgroup$ – Taufi Jun 6 '17 at 14:33
  • $\begingroup$ OP, your logic is correct, The statement is false, because the increase in GDP per capita could be due to a population decrease. $\endgroup$ – BB King Jun 6 '17 at 14:34
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    $\begingroup$ Possible duplicate of Calculating rate of growth of per capita income $\endgroup$ – luchonacho Jun 6 '17 at 15:59
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Your reasoning seems correct.

if we consider that Gp=G/(population) and we know that Gp is increasing then we have the following possibilities:

  • if (population) is static or growing then we can conclude that G must necessarily be growing
  • if (population) is decreasing then G can be either static or actually decreasing slower than (population). In this case, the statement on the question fails
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