Final answer:
Per capita income, measured by GDP per capita, is used to classify countries as developed or developing, offering a more accurate representation than comparing GDP alone, exchange rates, interest rates, or inflation rates.
Step-by-step explanation:
Per capita income is normally used to classify countries as developed or developing. This measure is calculated by dividing a country's Gross Domestic Product (GDP) by its population. Countries with large populations can have large GDPs, but this alone may not accurately reflect the individual wealth of its citizens, making GDP per capita a more useful indicator. It accounts for population size, giving a more accurate representation of economic development and average national wealth per person.
When comparing GDP to establish a country's economic health in relation to others, it is important to consider both the total GDP and the GDP per capita. A country with a high GDP per capita is considered to be more economically developed than one with a lower figure. Therefore, GDP per capita is a better metric for classifying countries into developed or developing categories than exchange rates, interest rates, or inflation rates.