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    Question

    If a country’s nominal GDP is constant, then which of the following statements about it would be correct? 

    A It is impossible for the real per capita GDP to rise in such circumstances. Correct Answer Incorrect Answer
    B The real per capita GDP can rise if and only if the country’s population is shrinking and prices are falling. Correct Answer Incorrect Answer
    C For the real per capita GDP to rise, it is sufficient that the price level should decline. Correct Answer Incorrect Answer
    D It is possible for the real per capita GDP to rise even if the country’s population is increasing Correct Answer Incorrect Answer

    Solution

    RealpercapitaGDP = RealGDP/Population where, RealGDP = NominalGDP/PrceIndex So, if the prices are falling, then real per capita GDP can rise inspite of population growth. 

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