Explain the relationship between growth and standard of living and therefore explain its desirabilty with respect to improved standard of living.
2007-10-26 21:17:42 · 2 answers · asked by dlg3579 3 in Social Science ➔ Economics
In the theory that growth is due to capital accumulation, the rate of growth depends on the amount of saving in the economy, However the standard of living is determined by the amount of consumption, Since savings is income minus consumption, in this theory there is a trade off between present standard of living and growth that make a future standard of living higher.
2007-10-26 22:48:36 · answer #1 · answered by meg 7 · 0⤊ 0⤋
Simply put: the higher amount of growth, the higher the standard of living. Intuitively, it makes perfect sense and the simplest of simpletons will understand it.
2007-10-27 05:20:22 · answer #2 · answered by Viginti_Tres 3 · 0⤊ 1⤋