4.2.1.4 - uses of national income data

Question 1

Define GDP per capita

Answer 1

the total income of a country divided of the population of the country - it calculates the total GDP per capita

Question 2

Define PPP

Answer 2

Works out the exchange rate that would equalise the price of goods and services in different countries once converted into the same currency. (Taking into account inflation and the cost of living)

Question 3

Limitations of using gdp as a measure of comparison between countries

Answer 3

• not all statistics are found to the same level of accuracy
• ignores work that occurs in an economy that doesn’t have a monetary value ( volunteering, childcare etc..)
• does not consider the negative externalities of activities
• doesn’t show inequality of the distribution of resources
• does not account for innovation ( making changes to improve economy)