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Economists often use GDP per capita to compare living standards across countries. For example, an economist might conclude that living standards are higher in country
Economists often use GDP per capita to compare living standards across countries. For example, an economist might conclude that living standards are higher in country A than in country B if country A has higher GDP per capita than country B (when GDP is computed using common prices in the two countries). Is GDP per capita a perfect measure of living standards? Explain why or why not. Are there other components that might affect living standards that are not accounted for by this measure of living standards?
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