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</html>";s:4:"text";s:9452:"Disadvantages include government spending as a positive portion of GDP along with natural disasters and the fact that it does not take into account work done outside of a monetary transaction (housewife cleaning the house and making dinner for example). When the GDP is adjusted for inflation, it is called nominal GDP. It helps in doing the comparison of the standard of living that is present in the different countries of the world. Here real GDP can't measure Standard of living. By closing this banner, scrolling this page, clicking a link or continuing to browse otherwise, you agree to our Privacy Policy, Christmas Offer - All in One Financial Analyst Bundle (250+ Courses, 40+ Projects) View More, Investment Banking Training (117 Courses, 25+ Projects), 117 Courses | 25+ Projects | 600+ Hours | Full Lifetime Access | Certificate of Completion. Real GDP per capita calculates an average figure, due to this it is not possible to get the output from it regarding the distribution of the income among the people of the country i.e., it does not tell that how the wealth is spread in the country. |~ », Easy to compare as the population of a country is taken into account, Gives good figures, so world leaders know where to spend money, Good indicator to show provision of services, Doesn't take the cost of living into account, Illegal workers and volunteers aren't included. So wealth distribution cannot be seen with the help of the Real GDP per capita. », Economics Assignment . … There are several different advantages which are as follows: Limitations and drawbacks include the following: Real GDP per Capita helps in measuring almost everything that the country creates in the entire year and is used for comparison of the living standard amongst the countries over the time which reflects the feelings of all the citizens about how prosperous is their country but at the same time it does not take into consideration cost of living of the person of their country, does not tell that how the wealth is spread in the country, does not take into consideration the details of earnings of the illegal workers in the country as well as the people who are working voluntarily in the country and does not give any indication on the spending power of the people of the country. Sweden ISN'T Socialist!         Registered office: International House, Queens Road, Brighton, BN1 3XE. GDP per capita is a measure that results from GDP divided by the size of the nation's overall population. In 2016, the GNP per capita in the UK was $43000 while in India it was only $1600. You can learn more about accounting from the following articles –, Copyright © 2020. There are several "disadvantages" if that's what you want to call them. Calculate the Real GDP per capita of the country under consideration for the year 2018. GDP also doesn't show how wealth is spread, as there could be a big rich-poor gap in a country. Therefore, GDP may overestimate living standards in a country. The resulting value by dividing the entire economic output of the whole country by the total number of people and after adjusting any impact of the inflation prevailing in the country for that period is known as Real GDP Per Capita. Advantages of using GDP/GNP as an indicator: Disadvantages of using GDP/GNP and an indicator: A useful figure for comparing countries. GNI figures provide a snap-shot indication of the huge difference between the more developed and less developed countries. ILLUSTRATION 2.3: finding it a bit difficult. so let us make an in-depth study on the advantages and disadvantages of globalization. GDP and GDP Per Capita. 806 8067 22 © Copyright Get Revising 2020 all rights reserved.  [Year 12 Enrichment Task] 21st May 2020. One of the disadvantages if the real GDP per capita is that it does not take into consideration the cost of living of the person of their country into account while calculating it. Real GDP reflects the value which has been adjusted for inflation while nominal GDP reflects the value without considering inflation (Abel, Bernanke and McNabb, 1998). One can tell from a country's GDP per capita how it performs economically relative to other countries and how it is performing overtime. For example in a country, Real GDP for the year 2018 is $ 10 trillion and during the same year, the total population of the country is 250 million i.e., there are 250 million people in the country during the year 2018. Can hide inequalities as it does not show the distribution of wealth. However, proper analysis of the entire process has delineated certain limitations of GDP per Capita in Measuring Growth. », ~| Guess What? Globalization gives us many advantages and disadvantages. Although the GDP per capita of a country may be very high, it may be the case that 10 percent of the country earn millions of times more than the other 90 percent of the country's inhabitants, who earn extremely low … 1st advantage China has a more developed than in many developing countries and the balance of trade, China's much faster rate than India has been since the 1950s, manufacturing growth. Please i need some help », Can I please get some hand here? One method of calculation is to consider GDP at its purchasing power parity (PPP). 9 Advantages of Globalization. Hides extremes; Doesn't say how wealth is spread; Doesn't take the cost of living into account; Only takes money into account; Illegal workers and volunteers aren't included; Evaluation. It makes the comparison easy as the country’s population as a whole is taken into account while calculating the Real. The formula for the calculation of the Real GDP per capital is as follows: Real GDP Per Capita formula = Real GDP / Population. Increases inequality: Sometimes spending more on gross national investments (GNI) per capita can hide the widespread inequality within the country. It is a Good indicator for showing the provision of the services. It refers to the measurement of total economic output in a country during a specified period divided by the total number of population of the country during the same period and considers the inflation prevailing at that point of time which helps in measuring the actual level of increase in the goods and services during the period of time in the company.  To call them economic welfare and performance has its’ advantages and disadvantages countries... When the GDP is adjusted for inflation, it is also a fairly decent indicator of standard of that... A measure is that you can learn more about accounting from the following articles –, Copyright 2020. 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