Question

How do we precisely measure the standard of living in a nation or economy?

a. We use GDP only.
b. We use per capita GDP only.
c. We use distribution of income only.
d. No one number is enough

Answer 1

The answer is D. No One number is enough

People often think that GDP per capita is enough to measure the standard of living in nation. We Calculated GDP per Capita with this formula :

Total GDP / Total Population.

The thing with using GDP per capita for measuring the standard of living in a nation is cant predict where the GDP came from. What if 90% of the GDP come only from 10 % of the population ? the other 90 % of the population wont be able to reach the living standard.

Thats why we also use the distribution of income

Answer 2

The correct answer is letter D. No one number is enough. To precisely measure the standard of living in a nation or economy, then no one number is enough. It is not either measured via the Gross Domestic Product (GDP) or the GDP per capita or Gross National Product.