ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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by comparing real GDP per capita
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by looking at the quality of life
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by seeing how the GDP is distributed
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by measuring physical capital
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Detailed explanation-1: -Economists typically would normalize the comparison between country A and country B in your example by calculating the growth rate of output (GDP) on a per capita, or per person, basis. Per capita output is a more meaningful measure for comparing the standard of living of different countries.
Detailed explanation-2: -Standard of living is generally measured using per capita GDP. Standards of living are usually higher in developed countries. In fact, basic measures of standard of living, such as per capita GDP, are often used to define the differences between more and less developed countries.
Detailed explanation-3: -Gross domestic product, or GDP, measures the total output of the economy, including activity, stability, and growth of goods and services; as such, it’s seen as a proxy for the economy. The standard of living is derived from per capita GDP, determined by dividing GDP by the number of people living in the country.
Detailed explanation-4: -GDP per capita is an important indicator of economic performance and a useful unit to make cross-country comparisons of average living standards and economic wellbeing.
Detailed explanation-5: -Since GDP is measured in a country’s currency, in order to compare different countries’ GDPs, we need to convert them to a common currency. One way to compare different countries’ GDPs is with an exchange rate, the price of one country’s currency in terms of another. GDP per capita is GDP divided by population.