If national income rises by 6% and population rises by 3%, per capita income will?
Answer Details
Per capita income will rise by 3 percent.
National income is the total income earned by a country, while per capita income is the average income per person in the country. To calculate per capita income, we divide the national income by the population.
If national income rises by 6% and population rises by 3%, then the increase in national income will be spread over a larger population. Therefore, per capita income will increase by a smaller percentage than the increase in national income.
To calculate the new per capita income, we can use the following formula:
New per capita income = (old per capita income) x (1 + percentage change in national income - percentage change in population)
Using the values given in the question, we can plug in:
New per capita income = (old per capita income) x (1 + 0.06 - 0.03)
Simplifying the equation:
New per capita income = (old per capita income) x 1.03
This shows that per capita income will increase by 3 percent.