Compare the ranking of US GDP purchasing power parity to tha

Compare the ranking of U.S. GDP (purchasing power parity) to that of other countries by visiting the CIA’s World Factbook. After reading the article U.S.A comes up a bit short in global Better Life Index and comparing the relative ranking of U.S. GDP to other countries, what is the link between wealth and welfare? Do governments have a responsibility to address welfare?

Solution

GDP is the Gross Domestic Product which is the sum total of values of goods and services produced in a country within a given period of time. GDP includes private consumption, investment, government spending and difference between exports and imports of a particular country. GDP of a country is calculated on yearly or quarterly basis.

Purchasing power parity (PPP) is based on the law of one price which states that in the absence of transportation cost and official barriers to trade, price of identical product in different countries must be same when they are expressed in same currency.

U.S. GDP (purchasing power parity) means international dollar possess same purchasing power over GDP as US dollar does in the U.S.

CIA\'s World Factbook ranks U.S. GDP at third place after European Union and China while prior to India, Germany and many other countries.

Wealth is the value of all assets owned by a person, a community, a firm or nation. Wealth is the difference between the sum of tangible and non tangible assets and then subtracting all types of debts. On the other hand, welfare is the efficient allocation of resources that improves the well being of general public. Welfare economics means allocation of goods that increases the welfare of people in the economy.

Wealth is a quantitative instrument which shows growth in terms of increase in income while welfare is efficient growth which improves standard of living of people. Increase in the income of a person indicates increase in wealth of a nation but it does not reflect increase in welfare of a nation. But if income of different persons increases which leads to increase in the standard of living of different people then it shows improvement in wealth and welfare of a country.

Yes, government put major concern on the welfare of a country as increase in wealth of a nation only shows growth of a country rather than development.

So, government takes various steps to increase the welfare of countries as it leads to development of a nation. Development of a nation includes growth, poverty reduction, expansion of education system, development of hospitals, etc. Development is a much wider concept than growth.