Answer to Question 1
Answer: Over the years, various measures of national income and prosperity have been developed. The UN measures the average income in countries through a complex index called annual gross national income per capita at purchasing power parity (GNI at PPP). Currently, the GNI at PPP for developed countries stand at 40,000 and approximately 5,000 for developing countries. While these are useful figures in and of themselves, it is important to note that there are wide variations in both the developed and the developing worlds.
Gross national income (GNI) is defined as the value of the output of goods and services produced in a country in a year as well as money that leaves and enters the country. When this is divided by the total population, we get the average contribution made by each resident towards the country's wealth in a year or GNI per capita.
This used to be referred to as the gross domestic product (GDP). However, GDP is only the value of the output of goods and services produced in a country in a year, but does not account for money that leaves and enters the country.
Purchasing power parity is an adjustment made to the GNI to account for differences among countries in the cost of goods. For example, if a resident of country A has the same income as a resident in country B, but must pay more for products, then the resident of country B is better off.
Answer to Question 2
Answer: D
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