Gdp Per Capita Analysis

GDP per capita is a measure that evaluates the economic performance and standard of living within a country. The term GDP refers to gross domestic product, which is a quantified sum of goods and services produced within a country over a specified time span. The calculation of GDP is used to analyze the economic performance level of a country, the units used to evaluate this measure is [C (consumer)+ I (investment)+ G (government) + (X-M) (exports-imports)]. GDP per capita is a ratio between GDP and population, which can be derived from the real GDP (adjusted for inflation) divided by the population. From this calculation of GDP divided by population, we are then able to determine the standard of living within a country. Standard of living

Population size is quite pertinent when understanding a country’s GDP per capita, because the population is divided by the real GDP to calculate the per capita rate. Superficially a country can appear to be wealthy due to its immense GDP; however, due to its population size, the country can have a low level of GDP per capita and thus a low standard of living. Theoretically, we assume that an increase in population will essentially increase GDP, because there will be more participants entering the labor force and more money circulating through the economy, therefore, equating to an increase in the production of output. The dilemma that stems from the exponential growth in population is that it can grow at a rate that eclipses that of the GDP, meaning the growth rate of the population may surpass that of the GDP. What is problematic in this case that the population size exceeds GDP is it minimizes the amount of income that is distributed among the population, therefore resulting in a lower standard of living. In the case that population is checked and maintained at a sustainable level, the country can then experience an increase in GDP per capita leading to an increase in the standard of