Question

Suppose you had a choice between living in the United States in 1900 with an income o $994000

per year or in the United States in 2018 with an income of 53,000 per year. Assume the incomes for both years are measured in 2018 dollars.

In which year would you have the highest real​ income?

In which year would you have the better standard of​ living?

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Answer 1

The highest real income is in the year 1900 since $994000 is greater than 53,000 per in absolute terms. Both figures can be compared since they are measured in 2018 dollars.

The better standard of living would be in the year 2018. This is because there has been considerable developments in terms of social, geographic and economic parameters. The level of material comfort, variety available to consumers, medical heath, etc. has increased exponentially. The advancement in technology has facilitated a better standard of living.