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Batra Macro Test 1 study guide

Batra Macro Test 1 study guide - BATRA Macro Test1...

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BATRA Macro Test1 studyguide Ch 2 General standard of living Standard of living: most well known measure for the standard of living in a country is the purchasing power of its gross domestic product or GDP 1. GDP – monetary yardstick of a country’s total output during a year 2. Real gdp- purchasing power/ gdp at a specific time 3. Real per capita gdp – better measure of living standard – gdp per person The average real wage: sum of all workers divided by number of workers. Better representation than GDP because it portrays the lifestyle of the vast majority of people, virtually everyone in society. Can be distorted by a few high wage earning individuals. Need to check the avg wage of the asset poor people. – people without assets earning them money aswell. Production Wage: production worker is someone in any occupation who operates under the supervision of someone else. – all non supervisors – average real wage of production workers fit the portrait of the asset poor. Best measure of general living standard because their salaries are generally their sole income and they represent as much as 80% of the workforce, and if you include their families, most of society. Real wage is an inflation adjusted quantity, which is an estimate of the purchasing power of your salary in terms of prices of some previous year- base year. – doesn’t include fringe benefits like health care and pensions Social trends: sinking living standard in America is confirmed by a variety of social trends- example: bancruptcies and mushrooming debtors… not its perfectly acceptable to be in debt… where as it used to be seen as irresponsible… now the expenses of most family’s outweigh the combined income of a husband and wife. What a sole earner could do for the family in the 50’s and 60’s are not done by 2 earner families anymore. Deciline in the household savings rate. 50’s-70’s avg house saved about 8% after tax income. Since then its dropped to 3% or less. Most households live paycheck to paycheck. --- changed the way people
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BATRA Macro Test1 studyguide live --- Working longer hours More time away from family Borrowing more Mushrooming inequality: the rich keep getting richer no matter the state of the economy.
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