Final answer:
GDP per capita is a better indicator of a country’s wealth because it provides an average economic output per person, accounting for differences in population size, and offers a clearer picture of living standards.
Step-by-step explanation:
A better indicator of a country’s wealth is GDP per capita rather than GDP alone. GDP per capita divides the gross domestic product (GDP) of a country by its population size, providing an average economic output per person. This is useful because it accounts for differences in population sizes among countries and offers a more accurate reflection of the citizens' living standards and economic health.
For instance, while a country like China might have a high GDP due to its large population, its GDP per capita would provide a clearer picture of the average wealth per person compared to a less populous country.
When we measure GDP in a country's currency, we must convert it to a common currency using the exchange rate to compare different countries effectively. Looking at GDP alone can be misleading because it does not consider population size, which can vary greatly between nations.
Therefore, GDP per capita is a more equitable measure when comparing countries with varying population numbers, such as the United States and Belgium, or Nigeria and Uruguay. Comparing GDP per capita allows for a better assessment of economic growth and living standards of the average person.