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17th Nov - as a dollar somewhere else-cost of necessities...

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Chose to use food – basic necessity, in 1964 was 1/3 of a family’s budget Two most widely discussed in terms of policy Absolute Measure specific indicators and adjust each year Relative Compare income to economic standards (median) Pros - accounts for changing levels of inequality within a society - as median income levels rise, if low level incomes do not, there will be an increase in poverty cons - changes in poverty rate do not necessarily reflect changes in well-being a short term recession that causes median income levels to fall will show that poverty is ‘falling’ people at low income look like they are “less poor” relative to the median income, but they are equally worse off purchasing power parity – a dollar in one place does not have the same purchasing power
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Unformatted text preview: as a dollar somewhere else-cost of necessities vary dramatically form one country to another-services provided by governments vary-measurement capabilities vary significantly graph-linear/log scales Growth and poverty Central problem of the ‘bottom billion’ is that they live in countries which have not grown Long-term growth – importance of high and sustained growth over decades Growth in value of output – Gross Domestic Product – total value of goods and services produced in a country Approx equal to income earned What matters most is growth per capital GDP per capita – distribution of income is different Long term growth – compounding – gaining interest on your interest that makes what you have grow quickly...
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