Suppose that country A has higher real income per capita than country B. Explain
B. The higher per capita income in country A could be the result of most citizens there having country B unearned income.
C. Most citizens in country B may be employed, while the majority of those in country A may not work.
D. All of the above are plausible.
A. A high degree of income inequality in country A may result in most of its citizens having incomes below the average income of country B.
Explanation:
Real per capita income is an average of the incomes earned by the citizens of a country. It is used to gauge the standard of living in a country.
However in the given scenario country A has a higher real income per capita but a lower real income than country B.
This can be explained by a disparity in income of citizens in country A. If some people are very rich and others are very poor, an average may give large per capita income.
While in country B if there is income equality the personal income of each individual will be high.
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