In 1992 the GDP per head of Malaysia was $2200 and that of Taiwan was $6600. Discuss the basis and confidence with which an economist might conclude that living standards in Taiwan were three times those in Malaysia. -Different subsidy levels -Exchange rate differences -Subsistence economies -Non-monetary transactions -Poor bureaucracy An economist could not confidently conclude that living standards in Taiwan were three times those in Malaysia for a number of reasons: Different subsidy levels in the different …
showed first 75 words of 427 total

showed last 75 words of 427 total
…it. If the Malaysian economy is largely dependant on trade, ie the exchange of rice for wheat, then the GDP will not represent the total value of all the transactions that have taken place in the economy. There are numerous reasons why an economist could not confidently conclude that living standards in Taiwan were three times those in Malaysia. The GDP figure is not a equitable representation of the standard of living within an economy.