A research agency compares national income measures for two economies. Economy A has a larger total GDP, but Economy B has a much smaller population and a s...
Question 1 Report
A research agency compares national income measures for two economies. Economy A has a larger total GDP, but Economy B has a much smaller population and a similar level of public healthcare.
(a) Which measure would be more useful for comparing average material living standards: total GDP or GDP per person? [1]
(b) Explain why the agency should also use non-income evidence when comparing living standards. [2]
(c) State one example of non-income evidence it could use. [2]
Answer Details
(a) GDP per person is more useful for comparing average material living standards. Total GDP does not allow for different population sizes; dividing GDP by population gives an average amount of output or income per person. [1]
(b) GDP does not measure every aspect of wellbeing. Economies with similar income per person can differ in health, education, safety, leisure, inequality, or environmental quality. Non-income evidence is therefore needed for a fuller comparison of living standards. [2]
(c) Life expectancy is valid non-income evidence. It indicates an aspect of health and wellbeing, so it can show whether people are likely to live long, healthy lives rather than merely how much income is produced. [2]
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