Answer to Question #128551 in Macroeconomics for Naafu Peter

Question

Q1. The per capita income in Ghana and Nigeria for the year 2019 are 4605 and 5927 dollars respectively. Discuss the flaws of using these figures to suggests that the welfare of people living in Nigeria is better than those living in Ghana.

Answer 1

Per-capita income calculates all the goods and services produced and consumed by the economy within the financial year. It depends only on economic factors. Social Welfare is not considered when calculating the per capita income of a country.Since it is an average, it does not reflect the distribution of income in the country i.e. it fails to show the huge gap between income of rich and poor.Therefore, it will not be accurate to state that the welfare of people living in Nigeria is better because it is more than that of Ghana.