Final answer:
In order to make international comparisons of GDP across countries, we need to convert them to a common currency. This can be done using the exchange rate, and then comparing GDP per capita by dividing GDP by population. This provides a more accurate measure of the standards of living across countries.
Step-by-step explanation:
When comparing GDP across countries, it is important to convert them to a common currency. This can be done using the exchange rate, which is the price of one country's currency in terms of another.
Once the GDPs are expressed in a common currency, we can compare each country's GDP per capita by dividing GDP by population. This helps to account for differences in population size.
It is important to pick this method of converting GDPs to a common currency and comparing GDP per capita because it provides a more accurate measure of the standards of living across countries. GDP alone can be a misleading indicator of a nation's wealth, as countries with large populations might have large GDPs.
By dividing GDP by population, we can better understand the economic welfare and standard of living in different nations.