what's the difference btw REAL GDP per capita & GDP per capita?

Question

need to know ASAP. thanks!

Answer 1

GDP per capita is a number for one period of time, say 2006.

Real GDP per capita is to find out the real value of GDP per capita compared to the previous year or base year taking consider the inflation factor.

e.g. In 2005 GDP was USD100 million.

In 2006 GDP is USD 110 million.
However, the inflation in 2006 is 10%.

Therefore the real GDP per capita in 2006 is at no change at USD100million.



Should there be no inflation (zero inflation) in 2006, then you can say the real GDP per capita in 2006 compared to 2005 is RM110million.

Usually, people compare to base year like year 2000, year 1990, 1980 and so on. Then you have to add up each year's inflation rates to get the answer.

Answer 2

Real GDP per capita takes into account purchasing power (ie factoring inflation, cost of living, etc).

So (for example) while GDP per capita might be $40,000 annually, the same country's real GDP per capita might only be $30,000 because their purchasing power is low = in country A a Big Mac costs $10, while in country B the Big Mac costs $5 (assuming both currencies are adjusted to be the same). Therefore things are more expensive in country A, and it costs more to live in country A, because you need to spend more money to afford necessities.)

Real GDP measures the cost of living.