Question

The living standards of people vary enormously and yet it is not always easy to measure these with great accuracy. It is, however, certainly the case that some countries suffer from extreme poverty. (a) Describe how living standards in a country can be measured. (b) Explain two reasons why the measurement of living standards in a country is not always accurate. (c) Discuss the actions a government might take to reduce poverty.

Answer 1

(a) The living standards in a nation can be measured with Gross domestic product (GDP). It is the best approach to measure the economic growth as it takes into consideration the entire economic output of a nation.

(b) The standards in a nation is not accurate always because it does not directly account for leisure, environmental quality, levels of education and health, activities conducted outside the market, increases in variety, enhancement in technology, changes in inequality of income, or the negative or positive value that a country may place on some output types. The two reasons that measurement of living standards would not be accurate always are:
-- GDP counts production that is exchanged in the market, however does not includes production that is not exchanged in the market. For instance, hiring an individual to mow the lawn or clean the house is part of GDP, however doing these tasks yourself are not considered in the GDP.
-- GDP considers how much is spent on environmental protection however it excludes the actual levels of country's cleanliness.

(c) U.S. the government has established anti-poverty policy to reduce poverty by providing the poor with sufficient in-kind benefits and cash to ensure that people make ends meet while also helps the poor children in achieving the self-sufficiency and get a foot on the ladder to success. In the country the federal government also implements various economic policies whose targets for the low inflation and generating full employment.