Suppose you are watching a news report with a friend. The news report points out that a certain African nation generates a GDP per capita of only $2,000 per year. Since your friend knows that the US GDP per capita is approximately $50,000, he suggests that Americans are materially 25 times better-off than the people of this African nation.
(a) Is your friend's statement accurate?
(b) What general categories of production are not captured by GDP in both the US and the African nation?
(c) Provide some examples of these types of activity.
(d) Why would the exclusion of this type of production affect the measurement of African output more than US output?
(e) Does this mean that residents of the African nation are actually as well-off materially as residents in the US?