The GDP in India is $2.65 trillion. The rate of inflation is 2.5%. If the population of India is 1,338,676,000, find the per capita GDP in this country.
Real GDP = GDP - (GDP \* Inflation Rate)
Per Capita GDP = \frac{\text { Real GDP }}{\text { Population }}
Per Capita GDP = $[?]$
Round to the nearest cent.
Answer (1)
Calculate the Real GDP by subtracting the product of GDP and the inflation rate from the GDP: Real GDP = 2.65 × 1 0 12 − ( 2.65 × 1 0 12 × 0.025 ) = 2.58375 × 1 0 12 .
Calculate the Per Capita GDP by dividing the Real GDP by the population: Per Capita GDP = 1.338676 × 1 0 9 2.58375 × 1 0 12 = 1930.0786747502757 .
Round the Per Capita GDP to the nearest cent: 1930.08 .
The per capita GDP in India is 1930.08 .
Explanation
Understanding the Problem We are given the GDP of India, the inflation rate, and the population. We need to find the per capita GDP. The formulas for Real GDP and Per Capita GDP are also provided.
Calculating Real GDP First, we calculate the Real GDP using the formula: Real GDP = GDP − ( GDP ⋅ Inflation Rate ) We have GDP = 2.65 trillion = 2.65 × 1 0 12 and Inflation Rate = 2.5% = 0.025 . Therefore, Real GDP = 2.65 × 1 0 12 − ( 2.65 × 1 0 12 × 0.025 ) Real GDP = 2.65 × 1 0 12 − ( 6.625 × 1 0 10 ) \text{Real GDP} = 2.58375 \times 10^{12}$ 3. Calculating Per Capita GDP Next, we calculate the Per Capita GDP using the formula: \text{Per Capita GDP} = \frac{\text{Real GDP}}{\text{Population}} We have Real GDP = $2.58375 \times 10^{12}$ and Population = $1,338,676,000 = 1.338676 \times 10^9$. Therefore, \text{Per Capita GDP} = \frac{2.58375 \times 10^{12}}{1.338676 \times 10^9} \text{Per Capita GDP} = 1930.0786747502757 Rounding to the nearest cent, we get $1930.08.
Final Answer Therefore, the per capita GDP in India is $$1930.08.
Examples
Understanding per capita GDP is crucial for assessing a country's economic well-being. For instance, if we want to compare the average economic output of individuals in India versus the United States, we would use per capita GDP. This metric helps policymakers and economists evaluate living standards and formulate economic strategies. It provides a more nuanced view than total GDP, as it accounts for population size, offering insights into the economic prosperity experienced by the average citizen.
