Choose whether the statement is true/false:

Per capita income is the most appropriate criterion for measuring the economic development of a country as it does not have any disadvantages.

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True

False

answer is B.

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Detailed Solution

The above statement is false.
Per capita income is indeed the most appropriate criterion and a standard indicator for measuring the economic development of a country. It is also known as average income and is obtained by dividing the total income of a country by its total population. But per capita income has certain disadvantages too. Per capita income does not reveal how well a country's income distribution is. Suppose country A has less total income than country B and a smaller population and government. In that case, A will have a higher per capita income than country B. Per capita income also ignores the social aspects of life. Hence the correct statement would be, Per capita income is the most appropriate criterion for measuring the economic development of a country as it has disadvantages.

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