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18 November, 22:14

Assume that the GDP of the United States is twice as large as the GDP of China. Can you conclude, based on this information, that the average indi - vidual in the United States is two times as well off as the average individual in China? Why or why not?

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  1. 18 November, 22:15
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    No, it depends on the population of each country.

    Explanation:

    It is easier to understand with an example:

    Let's suppose that U. S GDP is $20,000 and China's GDP is $10,000. The GDP measure the price of all goods and services produced in an economy in a specific period of time but, the indicator that is used to compare individuals in between countries is GDP per capita. GDP per capita is the same GDP I explained before, divided the population of each country. Let's suppose U. S population is 1000 and China's population 4000 (China's population was 4.25 times the US population in 2018). In this example, the US GDP per capita is $20 and China's GDP per capita is $2,5. This shows that not because US GDP is twice as large as China's GDP, then the average individual in US is twice as well as an individual in China, it depends on the population of each country. Because of that, it is better to use de GDP per capita and not the GDP.
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