Which of the following represents a problem with using per capita GDP to compare standards of living between less-developed and industrially advanced countries?
A) GDP 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) None of the above are correct.

Question

Which of the following represents a problem with using per capita GDP to compare standards of living between less-developed and industrially advanced countries? ​​
A) ​ GDP 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) ​ None of the above are correct.

Quizplus · Accepted Answer

Per capita GDP can be distorted by extreme levels of income inequality in a given country. For example, if a small elite enjoys a very high standard of living while the rest of the population lives in poverty, the per capita GDP will be high but not representative of the overall standard of living.

Which of the Following Represents a Problem with Using Per