Between 1960 and 2013 U.S. GDP, measured in dollars of constant purchasing power, expanded about 5.0 times. However, the standard of living only increased by 4 times over this period. Explain the difference
GDP growth includes the effects of inflation and population growth, meaning there are more labor inputs in the economy. The standard of living is better measured by real GDP per capita. To obtain the standard of living from GDP, one must correct for the effect of population growth.
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The fact that consumers often react more to changes in the posted price of a good as compared to changes in the sales tax that is not posted is an example of
A) salience. B) salinity. C) stupidity. D) rational ignorance.
In-kind transfers include the direct transfer of
A. Education rather than housing. B. Cash rather than goods. C. Cash rather than medical services. D. Goods and services rather than cash.
Figure 3-20
Refer to . If the price decreases from $22 to $16, consumer surplus increases by
a.
$120.
b.
$360.
c.
$480.
d.
$600.
As inflation decreases, households become ________ uncertain leading to ________ spending.
A. more; less B. less; less C. less; more D. more; more