Chapter 37, Problem 3CYU

To determine

To find:

Reason for poorer households in C and I compared to U.S. even when the growth rate is higher than the U.S.

Explanation of Solution

China and India have higher growth rates compared to America. However, the households in China and India are far poorer compared to American family. This is because of difference in population growth. The more the population growth is, the more the number of households are.

America has limited population, so the benefit of economic growth is more. On the other hand, China and India has more households, so the benefit of economic growth is less as it spans to the vast number of households.

Economics Concept Introduction

Real GDP is the value of goods and services produced in an year adjusted through inflation and divided by the population level of an economy.