Multiple choice

Suppose India's GNP increased at an annual average of 6.6% during the tenth plan, presuming that the growth rate of population is 2 per annum; per capita income would increase at an annual average rate of

  1. 3.3%

  2. 4.6%

  3. 6.6%

  4. 2%

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

To calculate per capita income growth: (1 + GNP growth rate) / (1 + population growth rate) - 1. Using exact formula: (1.066 / 1.02) - 1 = 0.0451 or 4.51%, which rounds to approximately 4.6%. The approximate method (6.6% - 2% = 4.6%) also gives the same answer. This is a standard compound growth calculation in economics.