Define GDP and real GDP per capita; explain why real GDP per capita is a better living standards measure

Define GDP and real GDP per capita; explain why real GDP per capita is a better living standards measure

• A. GDP is total value of goods and services produced; real GDP uses current prices; real GDP per capita equals GDP per person without adjustment.
• B. GDP is sum of government spending; real GDP per capita is GDP divided by population; real GDP excludes inflation.
• C. GDP is total value of goods and services produced; real GDP adjusts for inflation; real GDP per capita divides by population; real GDP per capita better reflects living standards over time.
• D. GDP measures only production in manufacturing; real GDP per capita is not related to living standards.

Answer: (C)