Answer to Question #138387 in Macroeconomics for sisi

Question

State whether each of following statements is “True” or “False” (Explain why if the
statement is false.)
a. A country with a greater GDP has a higher living standard than another
country with a lower GDP.
b. An increase in the nominal GDP of a country could be the result of an increase
in the price level or an increase in its output level.

Answer 1

Statement A is true.

A country with a greater GDP has a higher living standard than another country with a lower GDP.

Standard of living is the average quantity and quality of goods and services that people in a country are able to afford and consume.

The countries with greater GDP have high population and there economy is larger on a per person basis and with higher living standards .

Countries with lower GDP tends to have high population with with lower standards of living.

Statement B is False.

An increase in the nominal GDP of a country could be the result of an increase in the price level ,but not an increase in it's output level.

There are two types of GDP(nominal and real).

Nominal GDP takes into account the current price in the market without factoring in the inflation and deflation while the real GDP factors in the inflation.

When a country is having high GDP it doesn't automatically means there output was high.

An increase in nominal GDP may only means the level of prices has increased but not that the level of output has increased