standard of living Flashcards
material standard of living
the total amount of goods and services available for consumption
non-material standard of living
physical and mental wellbeing of individuals, quality of life
indicators of SOL
nominal GDP, Real GDP, Real GDP per capita
nominal GDP
the total monetary value of the final goods and services produced in a geographical boundary in a time period
Real GDP
reflects true purchasing power of individual in a country -> takes into account inflation
Real GDP per capita
reflects the purchasing power of individuals in the country on average -> takes into account population size and growth
Gross National Income (GNI)
the total monetary value of final goods and services produced by nationals of a country within a time period
higher GDP
increase total output = more goods and services = mSOL increase
increase total income = increase purchasing power = consume more = mSOL increase
govt can collect more taxes = spend more on society = improve quality of life = nmSOL increase
limitations of GDP
non-market activities, underground activities, data collection problems
GINI coefficient
value -> 0 = lower income inequality
value -> 1 = higher income inequality
purchasing power parity (PPP)
accounts for purchasing power of currency and amount of goods and services a person is able to purchase with his income
limitations of unemployment
definition of unemployment and type of unemployment
type of unemployment
full-time vs part-time -> unemployment rate does not factor in the type of jobs that citizens are employed in
limitations of inflation rate
false assumption that income remains constant and problems with consumer price index (CPI)
false assumption that income remains constant
unlikely that general price level of the country rises will the income remains entirely constant
