4.1 Comparisons of Living Standards - Comparisons over Time Flashcards
1
Q
What is the indicator used to compare living standards over time and explain its elements?
A
The indicator used is the real GDP per capita.
GDP measures the value of all final goos and services produced within the geographical boundary of a country during a period of time (material SOL).
By using real GDP in the comparison over time, any change in the value of the indicator can be attributed directly to changes in output and not changes in price (compared to nominal GDP).
By taking the indicator and dividing it by the population of the country (per capita), we eliminate growth in GDP attributed to the increase in population size.
