Country X has a population of 100 million and a GDP of $500 billion in 2017. Country Y has a population of 40 million and a GDP of $400 billion in 2017. Which economic measure would be most appropriate to make a comparison of the relative economic prosperity of each country?

Question

BlackTom AI · Accepted Answer

Real GDP per capita measures inflation-adjusted output divided by population, so it directly captures average economic prosperity per person.

1) Relevant concepts
- GDP (gross domestic product) measures total output/value of goods and services in a country.
- Nominal GDP is measured in current prices; real GDP is adjusted for inflation to reflect volume of output.
- GDP per capita (GDP/population) adjusts for country size and is the standard measure of average living standards or economic prosperity.
- Therefore the appropriate measure to compare relative prosperity across countries is real GDP per capita.

2) Step-by-step reasoning
- We need an inflation-adjusted per-person measure because (a) total GDP ignores population differences and (b) nominal figures can be distorted by price level differences over time or across countries. Combining both adjustments yields real GDP per capita.

3) Calculations (intermediate steps shown)
- Country X: GDP = $500 billion; population = 100 million.
  GDP per capita = (500 billion dollars) / (100 million people)
  Convert units: 500 billion = 500,000 million; 500,000 million / 100 million = 5,000 dollars per person.
  So Country X ≈ $5,000 per person (real GDP per capita, if price-level adjustment applied).
- Country Y: GDP = $400 billion; population = 40 million.
  400 billion = 400,000 million; 400,000 million / 40 million = 10,000 dollars per person.
  So Country Y ≈ $10,000 per person.

4) Why the correct answer is correct
- Real GDP per capita both removes inflation effects (real) and controls for population (per capita), giving a fair comparison of average economic prosperity. Here Country Y has a higher per-person output ($10,000 vs $5,000), indicating greater relative prosperity.

5) Why other options are incorrect
- a. Nominal GDP: total output in current prices; ignores population and inflation.
- b. Inflation: a price-level change measure, not a prosperity comparison.
- c. Real GDP: adjusts for price changes but still measures total output, not output per person.

6) Conclusion
- The appropriate choice is Real GDP per capita, which matches the provided correct answer.

Country X has a population of 100 million and a GDP of $500 billion in 2017. Country Y has a population of 40 million and a GDP of $400 billion in 2017. Which economic measure would be most appropriate to make a comparison of the relative economic prosperity of each country?Single choice

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