Question

The living standards of people vary enormously and yet it is not always easy to measure these with great accuracy. It is, however, certainly the case that some countries suffer from extreme poverty. (a) Describe how living standards in a country can be measured. (b) Explain two reasons why the measurement of living standards in a country is not always accurate. (c) Discuss the actions a government might take to reduce poverty.

Answer 1

The standard of living is a measure of the material aspects of the economy. These are the part of quality of life. It counts the amount of goods and services produced and available for purchase by a person, family, group, or nation.

(a). The generally accepted measure of the standard of living is GDP per capita. This can be found by dividing a nation's Gross Domestic Product by its population. The GDP is the total output of goods and services produced in a country during a year. Real GDP is a better measure of standard of living which is better than nominal GDP. A country which produced lot will be able to pay higher wages. Another way is by measuring GNI per capita that is Gross National Income per person. It measures the level of income paid to all the citizens of a country no matter where they are in the world. It can raise standard of living because many citizen live in other countries to get better jobs. The Human Development Index is way to assess development in terms of human wellbeing as well as economics. The satisfaction with life index attempts to measure happiness directly, by asking people how happy they are with their health, wealth, and education, and assigning a weighting to these answers.

(b). The measurement of living standards in a country is not always accurate because:

1. Poverty: Living standards need to take into account how income and expenditure are distributed through society. A country may have high GDP per capita but still have significant poverty.
2. GDP: GDP does"t measure the quality of the environment. A country might be able to increase its output if its eases pollution regulations. Yet, having higher per capita real GDP might not mean people have a better quality of life if the air, water, and other resources are more polluted.

(c). Some of the actions taken by government to reduce poverty are:

• Create jobs
• Raise the minimum wage
• Increase the earned income tax credit for childless workers
• Support pay equity
• Provide paid leave and paid sick days
• Establish schedule in work
• Invest in high quality child care and early education
• Expand medicaid
• Anti poverty measures and policies