Standard of Living

Question 1

2 types of SoL?

Answer 1

Material SoL and non-material SoL

Question 2

Definition of material SoL?

Answer 2

Refers to quantity of goods and services consumed by the average person in a country in a given time period

Question 3

How to measure material SoL?

Answer 3

Real GDP per capita - rise reflects increase in the amount of goods and services available for consumption for an average person in the economy

Question 4

Limitations of real GDP per capita to indicate material SoL?

Answer 4

Measures total quantity of goods and services produced in an economy but conveys no information about who gets to enjoy those goods and services - income may be distributed unequally

Rich have resources to enhance wealth vs poor, lack access especially to education

SG context: influx of cheap foreign workers, wages of lower income group falls, especially considering no min wage in SG

Need Gini coefficient to measure the extent of income inequality

Question 5

What is SG’s gini coefficient?

Answer 5

0.42

Question 6

How does inflation affect material SoL?

Answer 6

Rise in GPL affects the lower-income group more adversely, takes up higher proportion of their real income. Compounded by fact that SG has no minimum wage.

Question 7

Limits of inflation rate to affect SoL?

Answer 7

Limits: already factored into real GDP

Question 8

How does employment affect material SoL?

Answer 8

Increases material SoL of those gainfully employed

Question 9

Limits of employment rate in affecting material SoL?

Answer 9

Dependants not taken into account,
Level of wages not taken into account - may be stagnating over time
SG context: may include foreigners - inflated

Question 10

How does BoP position affect material SoL?

Answer 10

Surplus - X-M rises, AD rises, real GDP rises, material sol rises. If deficit, TR from X

Question 11

Definition of non-material Standard of Living?

Answer 11

Refers to the qualitative aspect of SoL - Quality of Life

Question 12

Indicators for non-material SoL?

Answer 12

Real GDP as proxy - LT spending on edn and healthcare
Pollution Index
Stress Level

Question 13

Pollution link?

Answer 13

Relate to by product of growth - factories built, car usage increases

Question 14

Stress level link?

Answer 14

Higher working hours - longer working hours leading to growth may have tradeoff with work-life balance - higher stress levels - lower non-material SoL

Question 15

Limits of real GDP as proxy?

Answer 15

Govts may spend on corruption, Consumers may spend on demerit goods