What is GDP per capita and why is it used to compare development?

What is GDP per capita and why is it used to compare development?

• A. GDP per capita is a measure of total national income regardless of population.
• B. GNI per capita is the total income earned by residents, regardless of location.
• C. GDP per capita is the total value of goods and services produced domestically divided by its population; it is used as a rough measure of average living standards and to compare development between countries.
• D. Literacy rate is the percentage of people who can read and write.

Answer: (C)

GDP per capita measures the average economic output per person, calculated by dividing the total value of goods and services produced domestically (GDP) by the population. This standardizes the size of the economy per person, so it’s useful for comparing development between countries with different population sizes. It gives a rough sense of average living standards, helping to judge how wealthy or developed a country feels in economic terms. Keep in mind it’s just an approximate measure: it doesn’t show how income is distributed, ignores non-market activities, and price level differences can distort comparisons unless people compare using purchasing power parity. It’s also distinct from GNI per capita, which includes income residents earn abroad.

GDP per capita measures the average economic output per person, calculated by dividing the total value of goods and services produced domestically (GDP) by the population. This standardizes the size of the economy per person, so it’s useful for comparing development between countries with different population sizes. It gives a rough sense of average living standards, helping to judge how wealthy or developed a country feels in economic terms. Keep in mind it’s just an approximate measure: it doesn’t show how income is distributed, ignores non-market activities, and price level differences can distort comparisons unless people compare using purchasing power parity. It’s also distinct from GNI per capita, which includes income residents earn abroad.