3.1 (Part 1) standard of living and its indicators

Question 1

standard of living

Answer 1

the standard of living of an economy can be defined as the wellbeing of residents in the economy and is typically split into material standard of living and non-material standard of living

Question 2

material standard of living

Answer 2

material standard of living is associated with the amount of goods and services available for consumption by the residents of an economy

Question 3

non-material standard of living

Answer 3

non-material standard of living is associated with the intangible aspects of well-being such as literacy rates and life expectancy of residents

Question 4

gross domestic product (GDP)

Answer 4

gross domestic product (gdp) can be defined as the total monetary values of all final goods and services produced by factors of production located within the geographical boundary of a country in a given time period

Question 5

gross national income (GNI)

Answer 5

gross national income (gni) can be defined as the total monetary value of all final goods and services produced by the residents of a country in a given time period

Question 6

net factor income from abroad

Answer 6

gni - gdp
difference between the factor income received from aboard and the factor income paid abroad

Question 7

real gdp (gdp at constant prices)

Answer 7

real gdp refers to the physical amount of goods and services produced

Question 8

nominal gdp

Answer 8

nominal gdp refers to the monetary value of the goods and services produced. in other words, real gdp is (nominal) gdp that has been adjusted for inflation

Question 9

purchasing power parity (ppp) exchange rate

Answer 9

purchasing power parity (ppp) exchange rate is an exchange rate that takes into account differences in price levels between countries. ppp refers to the number of currency units required to purchase the same amount of goods and services that can be brough with one unit of currency of the base currency

Question 10

gini coefficient

Answer 10

the gini coefficient is a statistical measure of income inequality and ranges between 0 (perfect equality) and 1 (extreme inequality)

Question 11

human development index (HDI)

Answer 11

the hdi is a composite indicator based on an equally weighted average of three indicators - ppp adjusted real gni per capita, educational attainment and life expectancy at birth