Which of the following represents a problem with using per capita GDP to compare standard of living between less-developed and industrially advanced countries?
A) G DP per capita does not take into account differences in population between countries.
B) GDP is particularly difficult to measure in industrially advanced countries because a much larger percentage of economic activity occurs outside of officially measured market activity than in less-developed countries.
C) GDP per capita will overstate the prevailing standard of living for the average person in countries with extreme levels of income inequality.
D) GDP per capita and other quality of life measures are not correlated.

Question

Quizplus · Accepted Answer

GDP per capita only measures the average income in a country, without taking into account the distribution of wealth. In countries with extreme income inequality, the average income may be high due to the concentration of wealth among a small percentage of the population, while the majority of the population has a much lower standard of living. Therefore, using GDP per capita to compare standards of living between countries may overstate the standard of living for the average person in countries with extreme income inequality.

Which of the Following Represents a Problem with Using Per