ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -However, economists often make adjustments to GDP, such as using real GDP, or use alternative methods for determining the standard of living. Generally, rising global income translates to a higher standard of living, while diminishing global income causes the standard of living to decline.

Detailed explanation-2: -6 October 2016-Although GDP per capita is often used as a broad measure of average living standards, high levels of GDP per capita do not necessarily mean high levels of household disposable income, a key measure of average material well-being of people.

Detailed explanation-3: -Real GDP per capita removes the effects of inflation or price increases. Real GDP is a better measure of the standard of living than nominal GDP. A country that produces a lot will be able to pay higher wages. That means its residents can afford to buy more of its plentiful production.

Detailed explanation-4: -As a result, higher GDP per capita is often associated with positive outcomes in a wide range of areas such as better health, more education, and even greater life satisfaction.

Detailed explanation-5: -Per capita income is used to determine the average per-person income for an area and to evaluate the standard of living and quality of life of the population. Per capita income for a nation is calculated by dividing the country’s national income by its population.