Answers to Gross Domestic Product : Measuring a country’s income

1.Why isn’t money the most accurate way to measure wealth?  Simply counting the money a country has does not factor into account what that money is worth. We studied inflation earlier in the year referring to Germany prior to WWII. Because of inflation, their money became worthless. So, while they had a lot of money, it was not worth as much because of inflation.

2. Why isn’t Gross Domestic Product the most accurate way to determine wealth?  Gross domestic product does not account for population. While a country could have a high GDP, the income might have to be spread out across several millions of people. Vice Versa, the country could have a low GDP and a low population.

3. According to the article, what is the most accurate way to determine wealth?  GDP Per Capita

Define  High income countries: Countries have high standard of living  Middle income countries: Rely on agriculture and have a lower standard of living  Developing Countries: also used to describe middle and low income countries.  High income countries: Countries have high standard of living  Middle income countries: Rely on agriculture and have a lower standard of living  Developing Countries: also used to describe middle and low income countries.

1 of 4 possible answers to number 5  Only market transactions are counted. Work done for no money is not counted.

2 nd of 4 possible answers  Subsistence farmers would not be counted in the GDP. Meaning, if people live off of their own farm and do not purchase or sell their goods, then their goods would not be factored in the GDP.

3 rd out of 4 possible answers  GDP per capita does not factor in the distribution of wealth within the country.

4 th of four possible answers  GDP does not measure genuine happiness. It measures possessions.