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Economics · Oct / Nov 2016 · Paper 12 · Question 21

2281Living standards

Why is nominal Gross Domestic Product not a good measure to compare the standard of living in a country between two years?

  1. AIt does not account for inflation.
  2. BIt does not allow for savings.
  3. CIt does not include government expenditure.
  4. DIt only compares export prices with import prices.

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Correct answer: A. It does not account for inflation.

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