Answer to Question #162215 in Economics of Enterprise for ba

Question

It is expected that in the next twenty years the gross domestic product of China will become

larger than the gross domestic product of the United States. When this happens, what does it

suggest about the standards of living in both countries?

Answer 1

The expectation that china's GDP will be larger than USA GDP means that more goods and services will be produced in china than USA. Thus people will be better off in china in relative terms than USA.

However standard of living depends on many other factors such as Gap per capita, income distribution etc. since population of china is much more than USA, Gap per capita in china will still be lower than USA. Hence, standard of living in USA will be better than that in china.