Suppose a country’s total output is growing 10 percent per year, but its population is growing 11 percent

Suppose a country’s total output is growing 10 percent per year, but its population is growing 11 percent

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September 3, 2023
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Suppose a country’s total output is growing 10 percent per year, but its population is growing 11 percent per year. What will happen to living standards? LO28.2 a. They will rise. b. They will fall. c. They will remain the same.

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Explanation
b is correct
When the growth rate of level of output is less than the level of population growth in a year, it means that output per person decreases resulting in fall in the standard of living of a country. Expansion of population reduces investment and savings and lower the level of productivity in DVC countries. Consequently, DVC aims at reducing the rate of growth of their population in order to increase their average living standards.

a is incorrect
If the population growth outgrows the level of output in a year, then the living standards of a country would fall.

c is incorrect
When the population growth is more than output growth, it means that expenses for maintaining a large family would increase, reducing the level of savings and investment of families. Consequently, the standard of living would decrease.

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