Principles of Macroeconomics / Unit 3 MAC 0222 short lesson, about 20 seconds
GDP per Capita and PPP
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The idea
Comparing countries needs two adjustments: divide by population to get GDP per capita, and convert to a common currency.
In practice
A country can have a large total output and a small output per person.
Where people slip
Market exchange rates swing daily, so economists prefer purchasing power parity rates, which compare what money actually buys in each country.
Your place on the trail
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Builds on
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