Assigned Reading #14: Economic Growth

Which of the following is most likely the source of a growth spurt in GDP per capita between 1946 and 1985? A. Growth in aggregate hours B. Trade policy shift from import restricitons to tariffs C. Reduction in both federal budget deficit and current account deficit Answer is apparently A. My question: I see why growth in aggregate hours would lead to higher output, i.e. GDP. But why would it necessarily lead to higher GDP PER CAPITA?


Holding the population constant this assumption, increase in GDP would lead to higher “GDP per Capita” What do you think?

The answer is “A”. A lot of this was caused by women entering the work force. But anyway, to answer your question, “why would it necessarily lead to higher GDP PER CAPITA?”, GDP per capita includes the population that does not work. It is not GDP per person working, or GDP per hour. So, if twice as many people work with the same output, GDP per capita will double.