Differences in measured real GDP per capita across countries or over time may understate or overstate differences in true living standards. Consider the following scenarios. Assuming the stated facts are true, would these tend to cause the measured differences in per capita RGDP to overstate, understate or correctly reflect differences in true living standards? Explain. (Answer each part separately).
(a) Measured per capita real GDP in the US was higher in 2017 than it was in 2008. Meanwhile, prices were higher in 2017 than in 2008 in the US.
(b) Measured per capita real GDP is higher in India than in Pakistan. Meanwhile, air quality is higher in Pakistan than in India.
(c) Measured per capita real GDP is higher in Ecuador than in Bolivia. Meanwhile, a higher fraction of the population is engaged in underground economic activity in Bolivia than in Ecuador.
(d) Measured per capita real GDP is higher in the US than in Mexico. Meanwhile, annual hours worked per worker are higher in Mexico than in the US.