Real Income Per Capita Formula

Steps to calculate real gdp per capita.

Real income per capita formula. Real income formula there are a few ways to calculate. Gdp per capita real gdp population. For example a small town with a population of only 20 people had a total income of 200 000 in 2010. Per capita income is national income divided by population size.

The formula divides the nation s gross domestic product that is the gdp by its number of people in short the total population of the nation. Gdp per capita can be said to be a measure of a nation s economic output which shall account for its population that is the count of the person. For example if the per capita income for a nation rose from 50 000 per. Per capita income doesn t reflect inflation in an economy which is the rate at which prices rise over time.

Higher literacy rates find out online tool for visualization and analysis. Calculate the per capita income by dividing the total income by the population. The national income formula divides 5 million into 700 million getting a per capita income of 140. Theoretically when inflation is rising real income and purchasing power fall by the amount of the inflation increase on a per dollar basis.

Per capita income pci or average income measures the average income earned per person in a given area city region country etc in a specified year. Step 2 find out the deflator which shall be provided by the government of that economy. Finally the formula for gdp per capita can be derived by dividing the real gdp step 3 of the country by its population step 4 as shown below. You can also determine the gross national income per capita of a country using a similar formula to the one used to get the gdp per capita.

Step 1 one needs to first calculate nominal gdp either by using income method expenditure method or production method. Relevance and uses of gdp per capita formula. The formula how to calculate annual data since 1947. Real gdp per capita is a country s economic output for each person adjusting for inflation.

To calculate the gross national income per capita you will use the same information used to calculate the gdp per capita in addition to any income that residents have brought in as a result of foreign investments. It is calculated by dividing the area s total income by its total population.