Fundamentals of economics Essay Example | Topics and Well Written Essays - 500 words

Fundamentals of economics - Essay Example Some people are intended to spend loads of money and they also easily can do. We will see how rise in prices affect the living standards. There are so many elements in the standards of living. These are not only consumer goods but also there are some elements included in standards of living that cannot be purchased or are not under our control for example environmental quality and the services provided by the government. 2 Decline in living standard is not because of rise in prices. There are so many elements affecting the standards of living. 1. There have been a general slowdown in economic growth (the growth in the amount of goods and services produced) and in the growth of national income (the sum of all the income received in the nations). This means that the size of the income pie available to be divided among the families is growing very slowly than before. The prices of goods plays important roles for spending life, it can make life easy if prices of goods and services are low and it can creates more difficulties it prices are very high. But it does not mean to decline the standards of living. Standards of living depend on many factors. We have seen the factors those are affecting the standards of living and those are not affecting. There are also many other elements such as education, quality of education, health facilities.3 It can be defined as the income of the individuals or people after adjusting for inflation. It can be measured by subtracting the inflation from the nominal income. Mathematically it can be written as: Real income is a more useful indicator of well-being; it is based on the amount of goods and services that can be purchased with the income. It involves real variables as real income, real GDP and real interest rates. These real variables can be measured in physical units (standards of measurements of physical quantities)4. Nominal Income is the income that has