GDP GDP Per Capita and Living Standards 1 — Questions and Answers
Question 1: How is GDP per capita calculated?
- Total GDP divided by the population (Correct answer)
- Total GDP multiplied by the population
- Total GDP minus government spending
- Total exports divided by population
Correct answer: Total GDP divided by the population
GDP per capita is calculated by dividing a country's total GDP by its total population.
Question 2: Which of the following best describes GDP per capita?
- A measure of average economic output per person (Correct answer)
- The total value of exports per citizen
- The government's budget per resident
- The median household income in a country
Correct answer: A measure of average economic output per person
GDP per capita represents the average economic output or income per person in a country.
Question 3: If the U.S. GDP is $25 trillion and the population is 330 million, what is the approximate GDP per capita?
- $75,758 (Correct answer)
- $25,000
- $330,000
- $8,250
Correct answer: $75,758
Dividing $25 trillion by 330 million people yields approximately $75,758 per capita.
Question 4: A country with high GDP per capita necessarily has:
- High average income relative to population (Correct answer)
- Low income inequality
- A large total GDP
- High life expectancy
Correct answer: High average income relative to population
High GDP per capita only confirms high average income per person, not equality of distribution or other welfare measures.
Question 5: Which index is commonly used alongside GDP per capita to give a broader measure of living standards?
- Human Development Index (HDI) (Correct answer)
- Consumer Price Index (CPI)
- Gini Coefficient Index
- Purchasing Power Index (PPI)
Correct answer: Human Development Index (HDI)
The Human Development Index combines GDP per capita with education and life expectancy to provide a broader view of well-being.
Question 6: When comparing living standards across countries, economists often adjust GDP per capita for:
- Purchasing Power Parity (PPP) (Correct answer)
- Exchange rate volatility
- Trade deficits
- Population growth rate
Correct answer: Purchasing Power Parity (PPP)
Purchasing Power Parity adjusts GDP per capita to reflect differences in price levels across countries, enabling fairer comparisons.
GDP GDP Per Capita and Living Standards 1
How is GDP per capita calculated?