• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Does a Higher GDP necessarily cause a Higher Standard Of Living?

Extracts from this document...

Introduction

Does a Higher GDP necessarily cause a Higher Standard Of Living? One of the uses of GDP is to measure economic well being of a country's population through their standard of living. When using GDP, it is necessary to use Real GDP per Capita. Personally I don't believe that a higher GDP causes a higher standard of living, although it might do for the higher echelons of society. There are many reasons why I believe this: Firstly, national GDP figures hide the regional disparities and variations in unemployment, output and incomes. IN addition, there also exists within regions various unemployment black spots which are contrasted with areas of prosperity. This is shown in the example of the UK - GDP is on average �15,000, while in a survey from MORI in 1997 it states that 12 million people lived in poverty as they earned under �175 a week (after tax) ...read more.

Middle

There is evidence to show that during the years 1979 and 1993, the poorest decile's real income actually fell and as a result their standard of living would have decreased, while at the same time the general living standards have increased for the richest. Therefore GDP figures do not show the distribution of income and wealth - they nay be unevenly distributed among the population (e.g. in Saudi Arabia - small minority hold the whole country's wealth). Also, whilst national prosperity may be rising, relative poverty may also be rinsing. GDP figures tell us little about the quality of goods and services being produced. Therefore, a situation could arise, where the quality of the goods is slowly getting worse and worse, while at the same time the sales could remain if there was little ...read more.

Conclusion

consumer expenditure). The result of these goods is that they can create negative externality effects which constitute a reduction on standards of living. Therefore in conclusion, GDP is not a good way to measure standard of living, and there are a number of better ways which can be used - e.g. the crime rate of a country/region, the suicide rate, divorce rate, social welfare statistics - e.g. number of patients per doctor, infant mortality rates, average calorie intake, average education attainment at different age levels etc.. and also the amount of pollution ( although this, like other negative externalities in the economy are very difficult to put a monetary value on, Therefore, a higher GDP does not necessarily cause a higher of living. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Macroeconomics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Macroeconomics essays

  1. Comparing the effects of immigration on GDP in Malaysia, Japan and South Africa.

    As the GDP decreases during this year, the unemployment level has increase by 3.08% which shows many people are jobless during the year. Other than that, we can conclude that GDP for the year 2008 decrease because the total number of immigrants in 2008 has also fall drastically as Japan

  2. Compare and contrast the various methods of dealing with the problem of monopoly.

    However, these rules were "brushed" aside due to the nature of the merger, and the apparent confidence that the bank would collapse, and the government being unable to use more public money, therefore being unable to resort to nationalisation without public backlash.

  1. Report on Austrlian Workplace Relations

    come from workplace relations, such as increased costs to deal with any problems that arise between employees and employers, and increased costs that come from a high minimal wage. However with the recent weakening of some policies of workplace, output has increased and costs have decreased creating an increase in productivity.

  2. Budget 2004-05 and Economic Analysis of Pakistan

    Against an annual average rate of 1.4 percent in 1990s, per capita income grew at an average rate of 13.9 percent per annum during the last two years (2002-04) and 12 percent during 2003-04. The per capita income in dollar terms increased from $526 in 1999-2000 to $652.

  1. National income and GDP.

    We again look at growth of GDP of UK and her main competitors because of relative slow growth rate in population though it may make some error. Comparison is between of UK and her main competitors for last 4 decades.

  2. How have the Rates of Inflation in the UK Changed Since the Monetary Policy ...

    An increase in VAT will cause a once and for all rise in prices but this can lead to a wages spiral when they go up far too far. One of the main problems with this type of inflation is that it can lead to stagflation, this is where both

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work