Why is GDP per Capita useful as a measure of living standards?

The GDP per capita is simply calculated by dividing the nominal GDP in a reserve currency, for example the US dollars, by the total number of people in the country. This gives the average amount of income that each member of the population potentially has access to. GDP per Capita is widely used to measure and compare living standards around the world. Living standard’s refers to the measure of material welfare of the population of a certain country. 

GDP per Capita is a useful means of measuring living standards for a variety of reasons. Despite its limitations, GDP per Capita is still the most easiest and accurate measure of living standard we have. For instance, the GDP per capita in the US is around $25,000 while in Mexico it is around $7000. It stands to reason that by and large, the standard of living in the US is higher than the standard of living in Mexico. This same logic can be used to compare the standard of living between any countries.

Additionally, GDP per Capita is useful a measure of living standards as it allows you to look at an overview of each country, especially in an economic point of view. It considers how much a country is producing and more importantly, trends for the future economy of the country. GDP can be used most effectively when wanting to see the difference of the same country over time. Alternatively, GDP per Capita can also be used to compare living standards with other countries.

In conclusion, I believe that GDP per Capita is a useful as a measure of living standard because it is an easy, accurate and helpful way. However I do not believe it is the best way due to its many limitations.

Economic Growth

Economic Growth:

-        A simple definition is that it is the percentage change in national income measured over time.

-        A more complex definition is that it is a positive change in the level of production of goods and services by a country over a certain period of time. Nominal growth is defined as economic growth including inflation, while real growth is nominal growth minus inflation. Economic growth is usually brought about by technological innovation and positive external forces.

How do we measure it?

Economic growth is measured in Gross Domestic Product (GDP). This shows the total value of goods and services produced by an economy in a given time period, for instance a year. Demand and supply of goods and services in country is one of the main contributing factors that influence growth of GDP.

Measures of Economic Performance

HOW CAN WE MEASURE ECONOMIC PERFORMANCE

Economic Measures:

·      Balance of Payments –

o   Measures economic transactions between a countries residents and the rest of the world

o   Exports minus imports

o   It includes a Current Account:

§  The trade in goods

§  The trade in services

§  Income flows

§  Current transfers

o   It includes a Capital Account:

§  Sale and purchase of capital assets and non-produced or non-financial assets

o   It includes a Financial Account:

§  Trade in financial assets

·      Inflation –

o   A persistent rise in prices in an economy over a period of time

o   Causes include demand pull when aggregate demand faster rise than aggregate supply or cost push when increase in costs cause leftward shift in aggregate demand

o   Inflation does not fall – it slows down or speeds up! (If inflation in 2003 was 3% and in 2004 is 2% it still means prices have risen by an average of 2% over the last year!)

o   A fall in the price level is termed ‘deflation’

·      Growth (GDP) –

o   The value of output of goods and services produced in the UK during one year.

o   GDP per capita – GDP divided by the population (GDP per head)

·      Unemployment –

o   The number of people of working age who are without a job

o   The Claimant Count – those actively seeking work and claiming benefit

o   ILO (International Labour Organisation) measure– the number of people available for work and actively seeking employment

·      Exchange Rate –

o   The price of one currency in terms of another – the amount of one currency that has to be given up to purchase another currency

o   Determined by the demand and supply of a currency on foreign exchange markets

o   Demand determined by the purchase of exports, supply by the purchase of imports

o   There can be fixed, floating or managed (manipulated) exchange rates

Non-Economic Measures:

·      Quality of Life –

o   Infrastructure – roads, communication networks, bridges, railways, airports, ports

o   Water/Sewerage

o   Housing – affordable and accessible housing to meet the needs of those in search of homes and employment

o   Health

o   Education

·      Environment –

o   Pollution – land, air, sea and noise

o   Waste – waste disposal and waste management

o   Nature – areas of outstanding beauty, national parks, wildlife, ecology, sites
of special scientific interest

o   Land Use – planning regulations, building regulations

·      Health –

o   Primary and secondary care, health education, disease and accident prevention, number of doctors per head, access to health care

o   Improve standard of healthcare to improve growth rate (increase life expectancy, INDIA: so appropriate health facilities for future ageing populationà will be able to work for longer (years) therefore more money in the economy. )

·      Education –

o   The percentage of children in an area or country with access to good education

o   Schools, colleges and universities

o   The higher the percentage, the more developed the country

o   Uk has higher percentage of children being educated than China and India.

·      Unemployment-

o   If unemployment is high, the country is in a recession

o   Less money in the economy 

Business Coursework - Exemplary Work - Part Three

-WHY I CHOSE THIS AREA FOR IMPROVEMENT?

I have chosen the marketing function for improvement as I believe it would lead to higher sales and revenue, because although it would add to the expenses of Rock ‘N’ Sole Plaice in the short term, it would eventually grow their business and increase revenue to reach the owner’s aim to increase revenue to 5% this year (see appendix F7). For instance, by improving their marketing Rock ‘N’ Sole Plaice will establish a brand name which everyone will be aware of and thus lead to more customers and will also accomplish a larger market share for the business (this is the proportion of total market sales sold by one business). Furthermore, I have also chosen this are because it has the highest room for improvement and if improved will have a positive domino effect on the other areas of the business; such as operation management, people in the business and specifically finance because if revenue increases it would affect finance’s positively, and thus the salary of the employees in business may increase which would led to a higher level of motivation in increasing its efficiency of operations.  In addition to this, this is an area that needs urgent attention or it is very likely that the business could lose all its customers as its direct competitor (Fish And Chips) improves its own promotion (see appendix I). Although this is the weakest area, it can be easily improved as a result of my primary research and secondary research to reach exceptional performance from the business.