CHAPTER 2 POVERTY AND INEQUALITY Figure 2.1 Poverty and inequality 1 LEARNING OBJECTIVES In this chapter, you will be introduced to the concepts of poverty and inequality and their relationship to economic growth and development. Specifically, this chapter will help you: differentiate absolute and relative poverty or inequality; discuss global poverty and inequality; 1, 2. 3. understand poverty measures, issues, and variables; 4. appreciate poverty incidence and the Lorenz Curve; 5, examine poverty trap and the various effects of work combinations and ka government support; 6. _ reflect on ways how to alleviate poverty; 7. _ explain world targets toward poverty alleviation and eradication; 8. create a short documentary on economic poverty; 9. recommend steps on how to eradicate poverty; and 10. understand some poverty eradication measures at work. “With our globalized economy and sophisticated technology, we can decide to end the ‘age-old ills of extreme poverty and hunger.” Ban Ki-moon, b. 1944 ‘8th Secretary General of the U.N. Bohme. online image.LOOKING BACK ie omic + 1, you have learned the fundamentals of 6 and PHO om he various aspects OF & mm development. You wee able to appreciate the vriovs SPAT act, vests rade, Such as savings and investment, diminishing retu 2 pity, Fe a pean health and nutrition, property “ights sa 8 BoE ave ‘so eam tecearch and development, and population growth. SUPSCHCET cr production #8 the idea of production and productivity relative t0 "eT ccurces per works physical capital per worker, human capital per worker v roduction and ‘developmen fechnological knowledge. After that, the O-Ringtheor¥ Of 81 jexity of the also discussed, and you have attempted to understand T° © tion, This may processes and determine the effects of quality on tt" Fe why the rich economy distinctively has a more sophisticat ‘mics of the capita jh, the dynal than the poor ones. The Solow Model of long-term Sro¥"cidering the movement In Chapter (depreciation) line, and the investment and revenue curve: sion on economic w toward the steady state, were evaluated. Finally, there [email protected] OT civities, is 2 development in the country in terms of inflation, budget, fered the cOVID-19 pand or i ups, ‘on economic development, like leftist and pba % US under the Sustainab i as well as the target: oth eae 6 and its impact on the economy, 1d sustainable economic g°% Development Goal 17, promoting inclusive an productive and decent employment. INTRODUCTION ‘According to Amartya Sen, a Nobel Prize Winner in Economics, poverty is a comp! multifaceted world that requires a clear analysis in all of its many dimensions.’ Among th dimensions referred to in his theory are the geographical, biological, and social factors t must be taken into consideration to fully understand poverty, not just by determining tl poverty line that separates those who are above and below it. There are two main assets that the poor derive their income from: their own Jab Jargely unskilled labor—and the agricultural land. in effect, they diminish the prevalence poverty but undeniably make the rich richer, simply because they have th: n they own most of the agricultural land? mites This chapter is comprised of five parts in understanding poverty and development. First, we define and differ Pover . rentiate absol i one broader dimensions of measuring poverty. ni ea ti ieee i naa eh measuring poverty. Fourth, we appreciate ye "stl, we understand general ideas to reduce poverty aia . i inequality. em tet A nda | HE cma ie Ci Stet ‘Development Report, “Rural Household, < hee a and Ther, 26 | Economie Development * Pathways Out of Poverty?ith and c policy, nt from trade, learned vuch as er, and ant was suction explain vucture capital ement nomic issues demic inable full of rplex, gthe s that gthe ABSOLUTE AND RELATIVE POVERTY Economic growth, for a long period of time, has been impressive in Southeast Asia despite some hindrances ike the Asian Financial Crisis of 1997-1998, There sa presumption that growth reduces absolute poverty in the long run. To understand this notion, we define absolute poverty incidence as those levels of incomes and expenditures that fall below 2 level, popularly known as the “poverty line,” nominal value of which is adjusted to hold a fixed value of its purchasing power; whereas, relative poverty or sometimes called ‘inequality, is the comparison of the incomes and expenditures of the poor with reference to the rich or of some other groups.* POVERTY AND THE WORLD It is observed that impoverished countries share common characteristics. Those who are considered the poorest normally work in the agriculture sector; they are highly uneducated, somehow labeled as illiterate, and mostly considered malnourished. Industrial revolution created a great deal of inequality between countries and was believed to even intensify the gap between the rich and the poor nations. There are economists who suggest that the skill-biased technological change helped the rich countries that are considered ‘more educated and trained. They thrived as the technology basically replaces the unskilled workers that normally comprise the poor. There are some people who mainly attribute poverty to sluggish economicgrowth and low production and consumption of goods and services. According to a study made by the Asian Development Bank published in 2009 in the Philippines, it is evident that there is a population explosion in the urbanized areas, where labor-intensive work isin high demand, but the government is not able to sufficiently supply their basic needs such as education, health services, and food security. Another possible reason for poverty is the natural disasters that are considered catastrophic to economic resources, leaving the people to go back to zero in terms of capitalization. In addition, there is the apparent reduced influence of unions in businesses, tax policies are becoming more and more favorable to the rich Population, the upper-level management of economic organizations are receiving a hefty deal of salary and income as compared to the middle and lower-level management, not to ‘mention to the ordinary employees and the worsening gap in races and gender inequality. Poverty is relative to the standard of living of one country. A thresholdis set to determine who are below this line and may be considered impoverished or extremely impoverished. Extreme poverty is characterized by those disadvantaged in basic living conditions, such as food, clean water, sanitation, housing, good health, and even to information. In the light of poverty, we may see globalization as an avenue of exploitation and oppression. For example, a labor-intensive product like a Spanish brand T-shirt is ‘manufactured in Dhaka because it offers the cheapest labor and materials and has a weak = Fatzll Johan. Kangas, Jenie. Blomgren, and Hilamo, *Cross-Temporal and Cross-National Poverty 2nd "Mortality Rates among Developed Countries” =rope. We is einer tis stat, ape ‘other hand, the losers are the /~ have had the job, had it been given to th i low-income earners as losers at the same’ ° setting as putting profits first ‘before the peo even if it is considered a small ste; yy in spreading awareness of tt regulation to work c ‘consumers, and the low-income ¢ considered working in sweatshops. On workers in Spain or even Europe who may ‘manufacturers, although we may see these ‘We often describe companies in this type of There is hope in the eradication ptaire poe lke fair trade. A lot of developed countries lea ‘ Cention oa lta ous hat re sling fom poverty and even cid abuse So labels onthe packaging products tat are considered from ethical sources are fae Ceri ar trade foundation, equal exchange fairly traded, far for fe, and foleminde ‘among others. Another example is Fairtrade Labelling Organization International (FLO initiatives such as TransFair in the USA, Canada, Germany, Italy, Austria, and Japan. also monitor Fair Trade Foundation in the UK and the Max Havelaar in Holland, Switzerland, France, Belgium, Denmark, and Norway.° In the 2019 data by the UN Department of Social and Economic Affairs, young wor are twice as possible to live in extreme poverty as comparéd to adult workers. There ay around four billion of the population who did not receive any form of social protection Support. Due to the pandemic, the poverty eradication aim was off-track, manifesting fist increase in global poverty in decades; more than 71 million are pushed into extrer economic downturns in 63 countries in 2019 Poverty during this year. Not to. ‘mention, puta calamities effecting to around $23.6 billion in direct losses. The first Sustainab evelopment Goaladopted by allmember states ofthe United Nations aims to “end over arcu ts forms everywhere. It seven assocated targets aim, among others, to eradics Gen a fo shes everywhere; reduce atleast by half the proportion of me poner in poverty implement nationally appropriate soe Coverage of the poor and the runeaeena ets eos: and by 2030, achieve substa MEASURING POVERTY Tia sche 8, ‘The Hutchinson. Unabridged = 28 | Fconomic Developmentpanies, ey are wage The poverty line is constantly adjusted to hold the real purchasing power given changing price levels. In the Philippines, further ci ‘assification of the part below the poverty asian line Suffering from extreme hunger i called subsistence incidence. Filipinos whose Incomes times and expenses fall below the food threshold are also set by the government. 2ople. Inequality is oftentimes associated with poverty There are two major types of inequality: wealth and income. Wealth inequality is the uneven distribution of accurrleted assets after deducting the liabilities, while income inequality is income distributed in an step, of the: sora uneven manner. Today, the USA and the European Union, including the United Kingdom, trade have an accumulated population of less than 20% of the world but enjoy two-thirds of the ded slobal wealth; China estimates 20% of the population but enjoys only 8% of the wealth, Loa) India and Africa roughly estimate 30% of the population: and share 2% of the global wealth, For example, 100 is distributed in # population with a percentile of the richest, rich, oor, poorer, and the poorest. The richest receives P80, the rich at P12, the poor at an estimate of PS, the poorer at P2, and the poorest will have a relatively low share of P1 out of the P1090. They. and, a 2 70 © me 3 om: 4 : 20 ny, 20 a2 ate ¥ =_— > en, vial ial Share in income ‘Figure 22, Distribution of ncome to the World Populotion (S065-UN, 2015) POVERTY INCIDENCE Most countries such as Indonesia, Vietnam, Cambodia, and Laos use expenditure- based measures of poverty that are considered to be more in line with the economic theory that |s more relative to household well-being. Some countries such as Thailand, Malaysia, and the Philippines use the income-based measures of poverty, per individual and per household, and consider gender and age distribution. This is important to note when the Bovernment’s way of interacting short-term implications of paverty is the adjustment ofies or .e of fail i the percentag’ poverty Incidence (Mis the ree payer eee ; income or exBe! ence, 0 = (941% atts ra es) i he OMY 2, and poverty incidence jindanao has the Sr eae ere tices rater lips of te country, Minden sorreyictence omong tees) n 2018, with 23.8% fllowed by Visayas WE 30 ween wth 6OR Poverty nctence (smeng the population) epee Vines 20.2% and Luzon i 167%. The Notional capital ReBion experiencing the least poverty incidence. 83 As the poverty rate and poverty line The Lorenz Curve change over time, so are the moving up and down the ladder of the people due {0 technological progression, a general teen the sono oF sg nee f new consumption items.” Those who =o ae classes are not deemed to ‘Stay at their level forever. For example, a low-class income family may go up to middle class once they receive a higher paying job when one or some of the members become professionals or successful in business. in the same manner, a family in the upper class may suffer a the downfall oftheir class, FRR RRS 30 Economic Developmen Hemmeser capita) i number ‘statistics POVERTY TRAP rom 18% Poverty is a fluid idea with different meanings in diferent places, it ‘generally from thes {eeresents earning oF Hing off of less money than adequate, as deemed bys paren i country or region."* ia pe There are findings on how to combat and alleviate poverty, but People and the government need to really be on top ofthe issue to finally resolve the problem, It would definitely nt be easy and would not be in the near future, but the steps that we undertake today will defintely shape what we will become in the long run. We have just recenty experienced a drastic turn of events when the pandemic hit us. This was obviously not expected, andi hit all the nations, causing poverty incidence to gO up the notch $0 quickly that alot of government and social interventions were set place. Let us take a look atthe Philippine statistics before the pandemic hit the country. 2s to be 1=2018 06) m2005 (%) Migrant ard formal workers You Senior etizens Women Individuals in ural areas Individuals in urban areas Settemployed and unpaid family workers Fishers Persons with dsabities chideen Figure 2.4. Poverty among Basi Sectors inthe Philppines!* On the issue of poverty trap, why Is poverty likely to persist worldwide? While Bovernments and NGOs are working hand-in-hand in solving this issue, programs in place are deemed ineffective at reducing poverty at its very core, A lot of poverty reduction Programs, that will be discussed in the next section, are likely discouraging people to work, as employment may not be available. In the 2019 Teport of the PSA, in addition to the thresholds and incidence, other; ‘measures such as income gap, poverty gap, and severity of Poverty are used as metrics to measure poverty in the country. * Gale Encyclopeda of Publ Heath Nested “Poverty "Philippine Statistics Authority. “Official Poverty Statistics? Bersales, “Proportion of Poor Filipinos’ PSA. =:of the pover The existence ets, the situa nce of losi 3 tested social security benefits, the SET conseque INg entitlement foes family being worse toan individual or for other benefits." ‘Table 2.1. Earnings at Different ¥f Work and Government ings at ‘combinations of ments 2 |. Earni . srnment Support aa Raa [Tite iu) [earner | overmmen set a a a 2 f “5000 | 35,000 _ ; ~ Pe ae 500 For a regular Filipino who is earning San. 50 an hour, balancing leisure and work no.00 hours is depicted on the budget constraint line without government assistance. Working i for 2,500 work hours for P50 would meanno = °=* leisure hours and earning P:125,000 a year, given that there are 50 weeks in a year. Ifwe © limit it to 40 hours a week, 2,000 labor hours 2 year at PSO will be earning 100,000 (see Point X in the graph). As we increase leisure time, hours for work would decrease and ‘would diminish our opportunity to earn, Figure2. Poverty Trop: Budget Constraint without Now, suppose there is a government Nie. ae Program that would guarantee a poor Filipino an income of 120,000 a year. Table 2:1 shows the effect of the combination of work and government assistance: Work done, th 2 Would still receiy » the employee ———_feeeive 120,099 ra a Which 32 | camo Deepen{sa system of vere + in earnings leads ing entitlement tg, nent Support 120,000 P120,000_ 120,000 meen omputation >elmposed. ve tax codePTER3 ANATION’S WEALTH Figure 2.4. Gress Nevioan’ Hepplness LEARNING OBJECTIVES In this chapter, you will be introduced to a nation’s wealth in relation to economi growth and development. Specifically, this will help you: 1. expound on GDP as a metric for economic growth and development; 2. contrast the two approaches of computing the GDP; 3. evaluate the uses of GDP and its implications on economic growth over data on GDP and apply it to your understanding of economic gro\ levelopment; iss other measurements of a nation’s income or wealth; ae the case of Vietnam as an economic miracle; and - fecommend possible measurements of performance from the case of economic development. “The welfare of eration can scarcely be __ inferred from a measurement of national income os defined by tne GDP" Simon Smith Kuznets, Nobel Memarial Prize in Fcoriom' 7 Big Giine image,OKING BACK We have differentiated absolute from relative poverty, the previous being relative to poverty line and the latter being known as inequality of the rich and the poor. Then, fad a discussion on poverty and the world where poverty and inequality are attributed gach other and to the sluggish economic growth and low production and consumption. ds and services, natural disasters that are considered catastrophic, bad politics, even discrimination. We also mentioned hope for the eradication of global poverty, ‘the commitment of all member nations of the United Nations to adopt Sustainable elopment Goals to eradicate poverty. Subsequently, we attempted to understand how measure poverty, its issues, and the variables to consider, We appreciated the poverty dence and equality through the Lorenz Curve, showing the relationship of the population percentile ranking to the national income. Thereafter, we examined what poverty trap ind the persistence of poverty despite all government and private sectors’ efforts to. Bdicate it. We realized various ways to somehow reduce poverty, like cash transfers, in- d transfers, work incentives, minimum wage law (which will be dealt with in more detail Chapter 7 — Labor Markets), and adjustment to the tax code, Finally, we have explained ‘target of the world for poverty alleviation and eradication toward economic growth and lopment. RODUCTION | For some, GDP may be the easiest and most accessible measure of economic well- ing of nation that can be associated with the standard of living of its people, Standard of ing as a social indicator may be attributed to the country’s social mobility, environment, ‘even income and poverty.’ Adam Smith, the father of economics, in 1776, published per titled, “An Inquiry into the Nature and Causes of the Wealth of Nations” or more ply, “The Wealth of Nations,” that tackled the foundations of alot of economic concepts h as Jaissez-faire, minimizing the government intervention, free markets, the work of sinvisible hands that guide the supply and demand and creation of wealth not only from ut also from assembly lines, and market systems and capitalism.? This has been the: tion of the attempt to understand a nation’s wealth that is relative to the use of we are going to discuss the GDP and its components, measurement, and negative dimensions, real and nominal GDP, and the imp of the GDP tor in understanding inflation. This is toward policy-making. ‘In this chapter, WoiisofSociclogy. “Seri indestors! outledge Dictionary of Economics, “Sith, Adam, 17 ce i Sanaa .GROSS DOMESTIC PRODUCT (GDP) The market is composed of buyers and pe it | may be the government, frm, or household, and the. | interaction of the two crestes income and expense th may be used to measure the goods and services that | “Peso Volue” monetary vale flow within the economy or the circular flow of national | Goods and Services* Finished goods do not ichade imermediate goods. income.‘ For example, Rafael sells buko pie to Ella for #280 a box. When Fila buys the pie, it becomes an expense on her part and obviously an income for Rafael. ThE | in yas yours ge transaction shows that there is an equal monetary ValU@ js ann sor ‘that is involved, that is P280, and both contributed to the includes in another year economy as described in the circular flow of income. This \-——=--———-— is a simple instance of money flowing in and out of the markets of goods and services a the markets for factors of production. “within the countzy”™ fomestically produced Thus, this can be used to measure the gross domestic product, which is considered by economists as a major measurement of a nation’s income, of course, at a given time and at 2 given place or region. It is important to note that the income should always be the sai as the expense, although the case is not true all the time. Every economy wants a fol term economic growth; this is an indication of development. There is a need to know if tk ni economy is growing or contracting, and GDP is able to estimate such. GDP is the peso value Of all final goods ond services that are produced in one country in.a year. Finished go do not include intermediate. ‘goods, for example the car seats, window shields, rubber tires and stereo system for cars that are locally manufactured. It is important to note that include in the GDP only domestically produced B00d5 and services, which would mean, fe ample, apple products that are known to be produced in China are nat included, How. it can be comprised in the computa of the Gross National Product (GNP determining the difference between the two. Goouls that are already included ir the GDP of the previous periods are included, like a house purchased ye: back or used clothes that are sold in uka ukays.* Furthermore, GDP computatior excludes financial transactions — ik Investments in stocks and bonds as the 'sreally nothing produced here; itis capital transfer. Of course, non-materi 'B2l goods are not counted in determination of the Gp, Eoes Ditionry of Economies, “ietor Pom of Natice! come Modelr | The Economics of Secondhand RetallTado: An Analysts of he Market for Uta kay “Eeoromic Davalopment ;COMPONENTS OF GROSS DOMESTIC PRODUCT. | This section explains the two methods of calculating the GDP: the expenditure l@pproach and the income approach. The first one summarizes the total expenses to buy Hfinal goods and services by households, firms, and the government. We use the formula Below in computing the GDP using the expenditure approach GDP =C+1+G+(X—M) Where: GDP = Gross Domestic Product C= Total spending on consumption goods and services | = Purchase of plants, equipment, buildings, ete. = Government spending on goods and services (X—M) = Net exports or exports less the imports ‘Consumer spending is the peso value that households are spending for final goods and services in a year, for example, supplies used at home, food, restaurant spending, and. ‘any more. Government spending includes both national and local government units’ spending tp acquire goods and services that afe used for public facilities, for example, when the Wvernment hires private contractors to build bridges, roads, hospitals, and the like. Net exports are just the difference between the final goods and services derived from jportations from exportations. The ideal situation is to have e trade surplus, if not a trade lance, wherein the value of exports exceeds imports, or they are equal/balanced. __ The other approach is the income approach. Here, we summarize the compensation ‘employees, net interest, rental income, corporate profits, and Income of other firms. GDP = Total National Income + Sales Taxes + Depreciation + Net Foreign Factor Income Where: Tote! national income is the sum of all wages, rent, interest, and profits. Sales taxes is the tax imposed on consumers for the sale of goods and services, ; Depreciation is the cost allocated to capital assets over an estimated useful life, Net foreign factor Income is the income that citizens make while abroad, less the income generated by foreigners in the country. rapte2 | A Neton’s Wealthin billions of doll 1a for the year 2022 ( forthe expenditure and the in lowing dats duct in both thi ry nas the Fol count For exemple, @ ashes We determine the grass dom approaches: Sea | rransfer payments yr Interest income oe Depreciation Se ages Business profits Indirect business texes 84 Rental income 85 Net exports 28 Net foreign factor income 22 Government purchases 166 Household consumption 314 Using the expenditure approach, GDP =C+G+1+(X—M], Household consumption (C) $314 Government purchases (6) 166 Gross private investment (I) 134 Net exports (X-M} 28 GDP {Expenditure Approach) $642 Using the income approach, GDP = NI +T + a D, where NI it (xe Wages, 77 + Rental income, Wa Rohs Osea 85 + Interest Income, 160 + Business Pro! $532 84 26 $642gto help us understond where the economy stands, For example, we want to know centage increase or decrease of GDP before the pandemic in 2019 and during the ie in 2020. Using the data provided by the World Bank, we can compute: GOP Current ~GDP Previous Percentage Change Increase/Decrease in GDP en oe = $362298~$376.08 Oo a76EB “The answer is a percentage decrease of approximately 3.86%. Second, to assess the efficiency and effectiveness of government policies, GDP is an ion of a positive or negative effect of the policy as an indicator of its success or and the extent of how the economy is helped or hurt by this policy. In effect, the Ament learns to refine and repeat the successes, and of course, stop the mistakes and ify the economic stimulants that impact them. Of course, this is just a minor indicator iciency and effectiveness that may be used. Third is to compere the GDP with that of other countries. A higher GDP growth sa better quality of life and a higher standard of living, in general. We determine the Powers, tigers, rising tigers, etc., boosting the economic reputation and enhancing business transactions with them. VERSUS NOMINAL GDP ‘Changes in volume of output as well as in price largely affect the total spending over dof time. For example, an increase in production would increase the total spending, Ie same is true when the price is increased on the same good and service. In order to the total spending that Is minimally affected by the changes in the prices of goods vices, economists have come up with a measure they call real GDP that evaluates [production using constant prices. i order to understand real and nominal GDP, let us take a look at this ‘example of s and guyabanos. Let us assume that these are the only two products that the produced from 2017 to 2021. Ys 2007, langoes Pas Mangoes in Tons | 25a ai ultiply the volume Pp fominal GDI used to m the nominal GDP, the current prices are vow, we take Note that the in computing e,inthe example given DEO i. vodvcton aven na pe of tm Id from 2017 to 2021 hence, the nominal GOp a ie yume of spel need rom 4 ttrbutable to the increase in| pres andthe ean alo sa tat the Inerease is partly attr gio ere nce and party eo the increase in spending. SS ci 9 2020 r 2037 2018 201: ea aa x apiseasy | (rastan | (Psstael (pa0%40) + rst computation ey (pestal_| 35) (e70*12) | _( oneal spp | enpesd | PAz70 piers | _r2a40_| P3050 Real GDP i Incomputing the real GDP, we use the base price: j 2017 wis 2019 aa Tie - (P15°25)+ | (p15*30) + | (puseas)+ | (P15*40) + | (P15*45) ae (esste) | (Psse10) | (P55%22) | (P55*20) | Peso | Pao7s | PL260 | P4775 price deflator i eet peasy is a metric used by economists to under ges n pies of products that are produced in ry. Iti to ap| ne : terey ‘one count: i ctivites in various timelines in order to adjust Miter . ie ‘fic policy toweGDP Defiator in year 2- GDP Deflator in year 1 GDP Deflaior in year 1 Inflation rate in year 2 ee CMEC 443-100 174-1453 199 GROSS DOMESTIC PRODUCT AND INFLATION. Two methods of calculating GDP: 1. Expenditure Approach — the sum of all expenditures to purchase final goods and services by consumers, businesses, and government GDP=C+1+G+(X-M) Where, E C= consumption expenditures (total household spending on consumption goods and services) » | = Investment (firm's purchase of plants, equipment, buildings, and addition to inventories) GS = Government purchases (government spending on goods | and services) (X=M) = Net exports (exports minus imports or “foreign sales” less “foreign purchases”) 2. Income Approach — adds the compensetion of employees, net interest, rental income, corporate profits, and proprietor’s income Inflation exists when there is.a sustained increase in the price level, The rice level is the average level of prices. The inflation rate is computed as follows: Inflation rate = (CPl this year)—(CPhiast year) 499 CPilost year labor force equals the sum of employed plus unemployed workers, Unemployment rate = Number of people unemployed 499 ‘Labor force uctivity function: ¥ = TF{L,k, H,N) re: quantity of labor (L), quantity of physical capital (K), qu a ital (H), quantity of natural resources IN ance aoa tancer capita is the best way in measutl of a country divided by i ‘ed in a given period of bution of wealth to its population, and t is that country within a given time period 1 more countries, mists who believe that GDP P ry. Essentialy, itis the GDP “There are econo ial output produc living in one count se population. GDPalone merely sas the fn put the GOP per capita clearly depicts the dist = a better measure than GDP of how prosperous ea atton if we have a comparison of GDP per capita between 179 rane veres: GOP ints purchasing power party value, which I in US dollars. The GOP per capita is @ metric used to measure the overall production of good and sunices in country translated to the value per person. Economists agree that thi 2, pater measure than the total GDP, whether real or nominal, as it can be comparables to other countries and realistically understand the standard of living of their respective jth the same GDP, but with high citizens. For example, we are comparing two countries wi different populations. The one with the higher population obviously will have @ lower GDF per capita and thus would mean a lower standard of living, as the denominator used in the ‘computation of the GDP per capita is the country’s population. the standard o' OTHER MEASUREMENTS OF A NATION’S INCOME/WEALTH {Gross National] | National Personal Revenue Genuine ‘Gross National Product. This s Th he dren ofa cor she sum ofl the Finished goods and ser ices produce Bloomsbiy Gide to human 1 Mornin Eneycloneas, ¢ Eicrlopedia of us, Ecg PHL "Gros Ni Net Nationa Produces NOMIC History. lacome"