Real GDP/GNI per Capita and PPP
Measuring Economic Activity and Illustrating Its Variations
AO2·AO4
Syllabus requirement
Measures that account for population and purchasing power differences to allow better cross-country comparison.
Assessment objectives
AO2 Application and AnalysisAO4 Use of Appropriate Skills
Summary
This topic explains how real GDP and real GNI are expressed per person (per capita) to average national income across a population and provide a measure of living standards. It also introduces purchasing power parity (PPP) and PPP-adjusted exchange rates, which account for differences in cost of living and inflation to make more meaningful international comparisons of real income.
