How does GDP affect cost of living?

Question

How does GDP affect cost of living?

In: Economics

Answer 1

It doesn’t.

GDP is a calculation of the value all (gross) the goods produced (product) in a country (domestic). (Gross domestic product).

Now there can be some correlation, where countries with High GDPs have high costs of living, but this often isn’t really the cost. For example, Luxembourg has a GDP of roughly 70Billiom US dollars. Significantly less than the US, which is 20.5 Trillion dollars. But Luxembourg has on average a higher cost of living.

Nigeria on the other hand has a GDP of 300 billion USD. But has a much lower cost of living.