Answer:
We
use averages for a better understanding. For comparison between countries,
total income is not a much useful measure. Since countries have different
populations, comparing total income will not tell us what an average person is
likely to earn.
According to the criterion used by
the World Bank, countries with per capita income of ` 4, 53,000 per
annum and above in 2004 are called rich countries and those with per capita
income of ` 37,000 per annum or less are called low income
countries.
Limitations:
There are limitations of this criterion.
Although the country may be rich, there may not be equal distribution of
income. A small number of people may be extremely rich and the masses may be
poor. Hence, while average income is useful for comparison it does not tell us
how this income is distributed among people.
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