4.3 - Measuring Living Standards

Question 1

What is the GENERAL meaning of ‘living standards’?

Answer 1

Generally speaking, ‘living standards’ is the level of material welfare of a community, class or person.

Question 2

What is the ECONOMIC meaning of ‘living standards’?

Answer 2

Economically speaking, living standards is gauged by GDP.

Question 3

What are the benefits associated with increased economic growth (HMM)?

Answer 3

Benefits:
- Higher income for workers (as businesses produce more products and services, they gain more money to pay their workers)
- More government investment as more tax gets paid (due to increased spending and income tax)
- More cash on hand for people to spend

Question 4

What are three ways to measure living standards (RIT)?

Answer 4

Three ways:
- Rate of economic growth; measured by GDP
- Income per person (a.k.a. salary)
- The amount of goods and services consumed by a country

Question 5

What are living standards gauged by?

Answer 5

Living standards are gauged by GDP.

Question 6

What will increased consumption lead to?

Answer 6

Increased consumption (more access to goods and services) leads to increased living standards and an increase in GDP

Question 7

What is the first thing increased employment rate leads to?

Answer 7

Increased employment rate leads to an increase in income taxes, which leads to an increase in individual expenditure (individual spending) and government investing.

Question 8

What is the second thing increased employment rate leads to?

Answer 8

Increased employment rate leads to workers having more cash on had, leading them to buy more. This increases the living standard, which increases economic growth and GDP.