What is a shortcoming of GDP per capita as a measure of a countries wealth?
The shortcoming of GDP per capita as a measure of wealth of a country is that it does not measure wealth but measures the average income or standard of living of the people. GDP per capita however is the best available measure of average income or aveage standard of living of countries: no other measure has yet been developed that is better or equal to GDP per capita for the pupose of measuring the relative standard of living. Mpost important, even for the task of measuring relative standard of living, the GDP has 4 short-comings and economists have found methods of dealing with the shortcoming: 1. Mere rise in prices over time can increase the per capita GDP without actually improving the standard of living: so, the economists work out per capita real GDP at constant base year prices to remove the effect of inflation/ deflation in over/ under stating the change in standard of living. 2. The currency exchange rates in the market may not be the true indicator of the real purchasing powe
