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Gdp per capita

The U.S. economy has the largest GDP in the world, by a considerable amount. The United States is also a populous country; in fact, it is the third largest country by population in the world, although well behind China and India. So is the U.S. economy larger than other countries just because the United States has more people than most other countries, or because the U.S. economy is actually larger on a per-person basis? This question can be answered by calculating a country’s GDP per capita    ; that is, the GDP divided by the population.

GDP per capita  =  GDP/population

The second column of [link] lists the GDP of the same selection of countries that appeared in the previous Tracking Real GDP over Time and [link] , showing their GDP as converted into U.S. dollars (which is the same as the last column of the previous table). The third column gives the population for each country. The fourth column lists the GDP per capita. GDP per capita is obtained in two steps: First, by dividing column two (GDP, in billions of dollars) by 1000 so it has the same units as column three (Population, in millions). Then dividing the result (GDP in millions of dollars) by column three (Population, in millions).

(Source: http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx)
Gdp per capita, 2013
Country GDP (in billions of U.S. dollars) Population (in millions) Per Capita GDP (in U.S. dollars)
Brazil 2,246.00 199.20 11,172.50
Canada 1,826.80 35.10 52,037.10
China 9,469.10 1,360.80 6,958.70
Egypt 271.40 83.70 3,242.90
Germany 3,636.00 80.80 44,999.50
India 1,876.80 1,243.30 1,509.50
Japan 4,898.50 127.3 38,467.80
Mexico 1,260.90 118.40 10,649.90
South Korea 1,304.47 50.20 25,975.10
United Kingdom 2,523.20 64.10 39,371.70
United States 16,768.10 316.30 53,001.00

Notice that the ranking by GDP is different from the ranking by GDP per capita. India has a somewhat larger GDP than Germany, but on a per capita basis, Germany has more than 10 times India’s standard of living. Will China soon have a better standard of living than the U.S.? Read the following Clear It Up feature to find out.

Is china going to surpass the united states in terms of standard of living?

As shown in [link] , China has the second largest GDP of the countries: $9.5 trillion compared to the United States’ $16.8 trillion. Perhaps it will surpass the United States, but probably not any time soon. China has a much larger population so that in per capita terms, its GDP is less than one fifth that of the United States ($6,958.70 compared to $53,001). The Chinese people are still quite poor relative to the United States and other developed countries. One caveat: For reasons to be discussed shortly, GDP per capita can give us only a rough idea of the differences in living standards across countries.

The high-income nations of the world—including the United States, Canada, the Western European countries, and Japan—typically have GDP per capita in the range of $20,000 to $50,000. Middle-income countries, which include much of Latin America, Eastern Europe, and some countries in East Asia, have GDP per capita in the range of $6,000 to $12,000. The low-income countries in the world, many of them located in Africa and Asia, often have GDP per capita of less than $2,000 per year.

Key concepts and summary

Since GDP is measured in a country’s currency, in order to compare different countries’ GDPs, we need to convert them to a common currency. One way to do that is with the exchange rate, which is the price of one country’s currency in terms of another. Once GDPs are expressed in a common currency, we can compare each country’s GDP per capita by dividing GDP by population. Countries with large populations often have large GDPs, but GDP alone can be a misleading indicator of the wealth of a nation. A better measure is GDP per capita.

Problems

Ethiopia has a GDP of $8 billion (measured in U.S. dollars) and a population of 55 million. Costa Rica has a GDP of $9 billion (measured in U.S. dollars) and a population of 4 million. Calculate the per capita GDP for each country and identify which one is higher.

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In 1980, Denmark had a GDP of $70 billion (measured in U.S. dollars) and a population of 5.1 million. In 2000, Denmark had a GDP of $160 billion (measured in U.S. dollars) and a population of 5.3 million. By what percentage did Denmark’s GDP per capita rise between 1980 and 2000?

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The Czech Republic has a GDP of 1,800 billion koruny. The exchange rate is 20 koruny/U.S. dollar. The Czech population is 20 million. What is the GDP per capita of the Czech Republic expressed in U.S. dollars?

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Questions & Answers

what is indifference curve
egbebiyi Reply
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Labiba Reply
utility is the satisfaction derived from consuming a particular product.
taiwo
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Demand refers to the various quantities of a commodity a consumer is willing and able to purchase at particular price with a period of time.
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Labiba
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taiwo
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Demand curve us a graph showing the relationship between the price and quantity of a commoditiy demand
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Demand schedule is define as a table showing the relationship between prices and the quantity of that commoditiy demanded
Alfusainey
Demand may be defined as a quantity of good or services that consumers are walling and able to buy at a alternative prices
Alfusainey
The law of demand states that all things being equal the higher the price the lower the quantity that will be demanded vice versa
Alfusainey
The law of supply states that all things being equal the higher the price the higher the quantity of a commoditiy that will be supplied vice versa
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Siaw Reply
money is defined as the medium of exchange
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Money is anything that has general acceptability as a medium of exchanging dabt
Alfusainey
Money is a legally or socially binding conceptual contract of entitlement to wealth, void of intrinsic value, payable for all debts and taxes, regulated in supply.
Nana
money is accepted material for buying and selling and also for payment of dept
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reekado Reply
what is the meaning of term depreciation
Niyogushimwa
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decrease in the valaue of currency is called depreciation.
Asit
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Onesmo Reply
Economics is a science that studies human behavior as a relationship between end and scarce means which have alternative uses:by Davern spot
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economics is defined as the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.
Semiat
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Maxwell
Economics is a social science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.
Maxwell
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Alfusainey
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Amogelang Reply
Explain what is a production possibility curve
Sharon Reply
A curve that indicates the various production possibilities of two commodities when resources are fixed...
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suresh
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A market is a place where buyers and sellers buy and sell goods through bargaining.
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Rohit Reply
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REBECCA
A short-run cost curve shows the minimum cost impact of output changes for a specific plant size and in a given operating environment. Such curves reflect the optimal or least-cost input combination for producing output under fixed circumstances.
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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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