Yes it would. I'm keen on the etymologies, too. For Bevölkerung, the hover hints do include "settling," so that's the clue on this one.
"be-something basically means to inflict that something on something or someone" (https://yourdailygerman.wordpress.com/2013/03/13/german-prefixes-explanation-be/) Volk - people
Be-volk -- people of a shared experience
Be-volker -- one of those people to whom a thing happened
-ung -- this suffix turns a verb into a noun.
So Bevölkerung-- are a collection of people who have been turned into a collection, i.e. they are now one people
Hope that helps. Having written all that out, I'm now pretty sure I'll remember it.
Population is a collective noun, which (I've just discovered) are usually treated as singular in US English and plural in UK English. I wrote "the population read" and was marked wrong, but now I'm actually thinking about it and beginning to question my sanity.
Anyway, regardless of US/UK English idioms, German treats collective nouns as singular (as far as I've encountered at any rate)
EDIT: In U.K. English, collective nouns can be treated as either singular of plural depending on whether the sentence is emphasising the group as a whole, or its component members. In case you're interested. It obviously has no impact on the German…although it does mean my answer is not necessarily incorrect.
Regarding your edit: this is /technically/ true in the US as well...but it is so rarely used that I was surprised to learn of it when I discovered it in my materials when I started teaching 6th grade grammar several years ago. I generally tell my students to rephrase; instead of "The class are arguing," write "The class members are arguing," for example.
Should this be interpreted as meaning that the population is literate or that the population consumes a lot of reading material? Or could it be interpreted either way? (Note that I tried the translation, "The population is literate," just to see if it would work, but it was rejected.)