Which term describes the average economic output per person in a country?

Which term describes the average economic output per person in a country?

• A. Gross Domestic Product
• B. GDP per capita
• C. Gross National Product
• D. Net Domestic Product

Answer: (B)

Think of per capita as per person. Gross Domestic Product is the total value of all final goods and services produced inside a country in a year. When you divide that total by the number of people in the country, you get the average economic output per person—GDP per capita. This is the term used to describe average output per person. The other measures describe different things: GDP is the overall size of the economy; Gross National Product adds residents’ income from abroad and subtracts foreigners’ income domestically; Net Domestic Product is GDP minus depreciation. GDP per capita is commonly used to compare living standards across countries, though it doesn’t capture income distribution or cost of living.

Think of per capita as per person. Gross Domestic Product is the total value of all final goods and services produced inside a country in a year. When you divide that total by the number of people in the country, you get the average economic output per person—GDP per capita. This is the term used to describe average output per person. The other measures describe different things: GDP is the overall size of the economy; Gross National Product adds residents’ income from abroad and subtracts foreigners’ income domestically; Net Domestic Product is GDP minus depreciation. GDP per capita is commonly used to compare living standards across countries, though it doesn’t capture income distribution or cost of living.