I Need Help As Soon As Possible! If Country A Has A Higher GDP Than Country B. What Does This Mean?


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Lily James Profile
Lily James answered
GDP stands for Gross Domestic Product. The GDP of a country is a kind of measure of the national income and output of that country's economy. GDP is defined in simple words as the total market value of the final goods and services that are produced in a country in an year.

GDP is calculated by the following formula:

GDP = Consumption + Gross Investment + Government Spending + (Exports -Imports)

Now coming to your question, since the GDP of a country is reflective of its Income and consumption levels, it is taken as an indicator of a country's standard of living. Now when a country has a higher GDP than the other country, it is assumed that the standard of living in that country is better than the other country.

Though there are many limitations of this approach, it is still the most widely used indicator of the standard of living in an economy, primarily because it is very easy to measure for every country of the world.

thanked the writer.
Oddman commented
Since it is the gross value of goods and services produced, it is not reflective of the standard of living unless expressed on a per capita basis. A more populous country with a higher GDP than a less populous country doesn't necessarily have a higher living standard or higher productivity.

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