What is the disadvantages of calculating average income for comparing countries?
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Since it is an average, it does not reflect the distribution of income in the country i.e. it fails to show the huge gap between income of rich and poor. It is vulnerable to change in prices i.e Inflation. It might increase due to rise in prices without any change in the physical output.
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★ Since it is an average, it does not reflect the distribution of income in the country i.e. it fails to show the huge gap between income of rich and poor. It is vulnerable to change in prices i.e Inflation. It might increase due to rise in prices without any change in the physical output.
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